Uncle Sam or the Internal Revenue Service (IRS) has gotten some really effective plans to bail you out of your tax debt crisis. It has started the so-called ‘IRS Fresh Start’ program to make it easier for struggling taxpayers like you to get rid of all the back taxes owed to the federal tax collection authority. This is slated to cover small business owners as well.

 

Logo of the Internal Revenue Service

Logo of the Internal Revenue Service (Photo credit: Wikipedia)

IRS Fresh Start program – The salient features

 

Here are some very important facts about the IRS’ back-tax repayment options to help you 
out of debt:

 

·   Installment Agreements – By the virtue of the Fresh Start program, a larger number of people like you are expected to become eligible for all the plans included in it. Now, if you, as an individual, owe not more than $50K on your taxes, then you may repay that in monthly direct debit payments for a period of six years, i.e., 72 months.

Usually, the IRS may require for a financial statement from you – something which isn’t always necessary. You may opt for the simplest gateway to file in the Installment Agreement by using the ‘Online Payment Agreement’ provided at IRS.gov. Or else, you may file in the Form 9465, used for Installment Agreement.

If you have more than $50K as tax debt or are seeking to make the repayments for more than six years, then also you’d have to submit your financial documents for review. Apart from that you have to file either Collection Information Statement Form 433-F or 433-A.

·   Tax liens This program has also increased the tax debt amount you have in your name before being penalized with a Notice of Federal Tax Lien from the IRS, which has become $10K now. Still, the IRS may slap you with a lien, even if you have tax debt that is less than $10K.

On fulfilling the requirements of the IRS with respect to your tax debt payments, you may ask it to remove the Notice of Federal Tax lien in writing by filing the Form 12277, known as Application for Withdrawal.
However, if you default in making the repayments under the Direct Debit Installment Agreement, then the IRS may file a fresh Notice of Federal Tax Lien following which, it’ll resume its collection activities against you.

·   Offers in Compromise – Under this federal tax debt repayment plan, you may get to settle your total outstanding back taxes for less than what you actually owe. The IRS has expanded the reach of its OIC plan under the Fresh Start program to streamline the tax repayment process as well as to use a more flexible criteria to assess your financial hardship and that of the others like you.

As a result, a lot of financially downtrodden people go through a similar situation like that of yours will now be able to qualify for the OIC. The IRS may accept your OIC if it means the most the agency can hope to collect from you within a reasonable duration.

However, if the IRS believes that you can repay the tax debt in full or via a payment agreement, then it’ll not accept your OIC application.

 

The IRS will use several factors and, that includes your assets and income, in order to arrive at a conclusion as to whether or not you can repay all your outstanding taxes.

The above article was graciously provided by Penn Ross to help those who need help in paying their income tax debt.

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