To make it easier for taxpayers to resolve their tax debt, the IRS has simplified the eligibility requirements for certain relief plans. The two major tax debt payment plans that were made easier under the Fresh Start initiative were:
The Fresh Start Installment Agreement gives taxpayers more time to pay their back taxes. Now, taxpayers can request an Installment Agreement even if they have a tax debt of $50,000 or more (vs. the previous threshold of $25,000).
Taxpayers need to provide a financial statement to the IRS and negotiate an agreement if they owe $50,000 or more in back taxes.
The maximum payment period for a Streamlined Installment Agreement has been increased from five years to six years.
Offer in Compromise
The IRS is now more flexible in allowing tax debt reduction if they see that the taxpayer cannot afford to pay the full tax debt by allowing them to do a Partial Payment Installment Agreement (PPIA) if they qualify. Changes have been made to the Offer in Compromise, which has made it simpler for taxpayers with financial difficulties.
Federal Tax Lien
Under the Fresh Start initiative, the IRS has made it easier for taxpayers to get the Notice of Federal Tax Lien removed.
If you have a lien, you can now get a withdrawal of your Notice of Federal Tax Lien after its release if:
- Your tax liability has been satisfied
- You have filed all your past three years tax returns, including individual, business, and information returns, and
- You have paid all your estimated tax payments and federal tax deposits.
Under the Fresh Start initiative, you can also get the Notice of Federal Tax Lien withdrawn if you have converted your regular Installment Agreement to a Direct Debit Installment Agreement.