Austin Tax Blog


If the name “Internal Revenue Service” always dreads and reminds you that you owe taxes, you might not have thought of a way out. Taxpayers with financial binds often feel that they can’t escape debts to the IRS. However, this endless journey or situation is not as dire as you have assumed.  

With its innovative programs and initiatives, IRS offers relief to taxpayers who experience specific circumstances and can’t pay their tax debt.  IRS tax forgiveness mental illness and Fresh Start Program, in this regard, are the initiatives that make it easy for taxpayers to settle or repay their tax debt.

If paying taxes to the IRS also seems overly complicated to you, you need proper schooling on the IRS Fresh Start program and its policies.

Basics of the IRS Fresh Start Program

As mentioned above, the Fresh Start program aims at making it easy for people who owe back  taxes to the IRS, without any lien placed on a property or vehicle. 

There is no denying that the process of a lien withdrawal is painful. This IRS program has added more flexibility to its offered benefits to help more individuals struggling with their tax bills.

Note that Fresh Start is not just a program, but it is a series of important changes that the IRS makes to tax codes to alleviate taxes. The program’s purpose is to enable citizens and people to pay taxes without having to give any security interest and excess fees. These changes mainly focus on payment plans, tax liens, agreement, installments, and offer in compromise (OIC). 

According to the IRS, tax liens are the government’s legal claim to a property or a vehicle when an individual fails or neglects to pay tax debts. That means if you fail to pay due to taxes, the government has a right to repossess your property. 

This is when options like “offer in compromise” or “installment agreement” come into play. They allow people to settle or pay their debt for a less amount than they owe. They can pay in the form of regular monthly payments. 

Changes to IRS rules have helped several taxpayers per the report released by the Treasury Inspector General for Tax Administration. According to this report, there is a significant decrease in liens issued by the federal tax department between 2010 and 2014.

 Eligibility of the IRS Fresh Start Program

  • Self-employed individuals who have a drop of 25 percent or greater in their net income
  • Earning for a married couple who filed jointly; the amount should be under $200,000 annually, and for the single filers, it has to be $100,000 per year
  • An individual must owe an amount of less than $50,000 in overall taxes

 How the IRS Fresh Start Program Reduces Back Taxes? 

  Generally, the IRS Fresh Start program offers two options to reduce tax bills. These options include;

  • Offer in Compromise

Taxpayers who demonstrate that they can’t pay their tax bills in full can opt for IRS’s Fresh Start program called “Offer in Compromise.” This IRS program needs you to seek the assistance of professionals from tax preparation service to negotiate with the IRS to allow you to pay less than what you owe to the IRS. Professionals from the tax preparation service have the right skills to negotiate the deal for you as it can be a daunting task.

Essentially, the taxpayers must show to the IRS that paying full tax bills can cause an insurmountable financial hardship. In such scenarios, the IRS considers forgiving a portion of the tax bill owed. Generally, taxpayers have to make a direct withdrawal of their installment payments from the account.

  • Installment Agreement

The  Installment plan of IRS Fresh Start is another payment plan for reducing tax debt. It can be an excellent option for taxpayers to seek relief in their penalties and fees. You can opt for this payment solution if paying tax bills by the yearly deadline is not possible for you. Plus, the option can help you pay fees associated with the taxes, including penalties and set-up fees.   

IRS installment agreement offers short term payment plans that allow taxpayers to pay late payment fees. The payment plans are usually less than 120 to 125 days and include penalties until the taxpayers pay the full balance over months. Note that there is no fee to set up this plan.

However, long-term installment payment may have some set-up fees. It depends on whether the bank has automatically deducted your payment from an account or submitted it yourself. In the Fresh Start program, taxpayers get enough time (several months) to pay their bills. They can avoid penalties for other fees and unpaid taxes.

Not only this, but there are also plenty of payment arrangements if you choose the installment agreement. For example, you can opt for a partial-pay installment agreement, stair-step installment, and streamlined installment agreement. With these options, you need to negotiate with the revenue service to determine your eligibility. 

Debt /Tax Forgiveness Program

Debt or tax forgiveness programs work in the same way as the Fresh Start Program. As the name implies, it offers debt forgiveness to people who can’t afford their tax debts. The IRS partially forgives tax debt under certain circumstances.

When the revenue service considers forgiving your liability, it looks at your financial condition. If it finds that its collection action may force you into a financial crisis in which you can lose financial security, it offers you IRS tax forgiveness programs.

Find out What Tax Bills You Owe

Before applying for IRS tax forgiveness programs, you must find out the exact amount of tax bills you owe to the internal service revenue. Knowing the status of your current tax debt is crucial when it comes to requesting IRS forgiveness.

There are plethoras of different ways you can use to find out the amount you owe. Some of the options include online checking IRS’s new portal, mailing the IRS, or contacting the IRS. You can also have a tax bill professional do some research for your pending taxes. 

Regardless of how you choose to figure out the amount you owe in taxes, you will need to have complete knowledge before you seek forgiveness.

How Can You Get Started with Tax Debt Relief

Follow the given steps to start with the Fresh Start Program;

  • Gather information, along with tax documentation, to handle your liability.
  • Meet with a professional tax attorney to choose your repayment method and discuss options
  • Send your documents to the IRS and keep the post office slip as proof.
  • Fill the IRS form on its website. They are easily available on the online portal.
  • Prepare for negotiation with IRS agent (work with your lawyer and give him all the details, including your financial situation)
  • Follow through the process to enjoy the financial freedom

Bottom Line

In a nutshell, the IRS has many programs aimed at helping people who owe the tax bills. Don’t worry if you haven’t paid tax bills in years. The IRS Fresh Start Program is the right option that can help you get back on your feet financially and give you tax relief. 


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