IRS Offers a Fresh Start
The IRS introduced the Fresh Start Initiative to assist both taxpayers and small businesses in becoming compliant with their taxes. The good news is that whether you’ve fallen behind on your own taxes or need to catch up on those owed for your business, the IRS has solutions that may be right for you. The IRS fresh start program was designed to remedy common problems attached to back taxes, as well as enable you to resolve your tax issue for good.
The Fresh Start Program and Federal Tax Liens
One of the best policy changes to come out of the IRS fresh start program was the threshold for lien filing. A tax lien occurs when the IRS stakes a claim on any property you own or come into possession of while you have an unpaid debt. This action can prevent you from taking on new lines of credit and can severely damage your credit score.
Previously, the IRS began filing tax liens against individuals who owed $5,000 or more in back taxes. Thanks to the IRS Fresh Start Initiative, the threshold has been increased to $10,000. This means that unless your situation provides unique circumstances which would compel the IRS to initiate a lien against you, this action will not occur if your debt is less than $10,000.
One aspect of the fresh start initiative that you may find particularly beneficial is the option to pay your tax debt using an installment agreement. Rather than scrambling to satisfy your full balance all at once, an IRS Installment Agreement enables you to make payments spread out over months or years, if necessary. The terms of your installment agreement will likely be determined by your filing history, how much you owe and what your budget allows you to pay each month.
Before accepting a repayment plan, it’s critical to ensure that you will be able to commit to the defined terms. For instance, failing to make a payment or paying late can invalidate your agreement, forcing you to start all over again. It’s a good idea to do a thorough expense analysis to make sure you’re not biting off more than you can chew.
Offer in Compromise
When you’re looking for a fresh start, IRS repayment plan options are largely dependent on your personal circumstances. You may qualify for an Offer in Compromise (OIC), which allows you to settle your liability for less than the total amount owed. This is an ideal proposition if you lack the ability to cover your full balance, and enables you to resolve your tax issue quickly.
An Offer in Compromise can be notoriously difficult to qualify for and requires you to provide a detailed account of your monthly income and expenses. Additionally, the approval time for an OIC can be up to a year. It’s important to learn the requirements for an Offer in Compromise before making such a request or, better still, seek the assistance of an experienced tax professional.
When Seeking a Fresh Start, Tax Experience May be Required
The Fresh Start Initiative provides you with a variety of tax resolution options. However, you may wish to seek that assistance of a licensed tax professional. Many resolutions for which you may be eligible require careful execution, which a tax pro at Tax Defense Network can provide to ensure your fresh start doesn’t stop abruptly.