In 2011, the IRS took some very important steps to provide tax relief to the thousands of deserving individuals who desperately needed it. That year, the IRS Fresh Start Program debuted: a hugely useful tool for everyday taxpayers who were trying to find a resolution to their owed tax obligation.
Although the IRS has somewhat moved away from using the terms “IRS Fresh Start Program” or “IRS Fresh Start Initiative,” the policies introduced by the program still remain in effect today. Essentially, the program is a reaction to the IRS’ realization that, for taxpayers trying to meet their back tax obligation in good faith, options were woefully slim.
Many taxpayers thought that they were paying the appropriate amount of taxes, only to find at the end of the year that they still owed a large sum. Often, that amount was more than they could afford to pay. This situation resulted in a mess of collection efforts, liens, and other problems that ended up hurting both taxpayers and the IRS.
Enter the IRS Fresh Start Program. In the IRS’ own words, this program was designed to “help individuals and small businesses meet their tax obligations, without adding unnecessary burden.”
One of the most significant impacts from the IRS Fresh Start Initiative was to significantly raise the dollar amount at which liens are placed on a taxpayer. Liens are automatically filed when an individual’s past-due balance reaches a certain threshold. However, before the Fresh Start Program that amount had not been adjusted for inflation, and the bar was so low as to be unnecessarily punitive for many taxpayers.
Additionally, the IRS Fresh Start Program’s lien withdrawal guidelines made it a little easier for taxpayers and their attorneys or accountants to get liens taken off. Through the initiative, the lien process was somewhat streamlined and became less stringent as a result.
Although the Offer in Compromise policy had existed before the Fresh Start Initiative, the program significantly widened and streamlined the OIC process to help more people. Most notably, rather than using a 48 month multiplier to determine the offer amount pertaining to future income potential, the IRS reduced the multiplier to 12 months. For many taxpayers, the reduction of the future income multipliers is the difference between Offer In Compromise acceptance and rejection. Moreover, it allowed new expenses against gross income which were previously not allowed for calculating a Taxpayer’s remaining monthly income.
The Offer in Compromise policy is still around, but it remains tricky to get accepted, and you may wish to retain a tax attorney before attempting to negotiate an OIC on your own.
Through the power of installment agreements, Offer in Compromise, and relaxation of tax lien guidelines, the Fresh Start Program offers tangible relief to struggling taxpayers. If you’ve heard about the program and are curious about how these policies might apply to your specific tax situation, contact Abajian Law today to set up a no-obligation consultation — and find out how you can make your own fresh start.
Professional Tax Representative
September 23, 2022