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Friday, July 17, 2015

A Review of IRS Fresh Start Programs



In 2011, the IRS announced the expansion of the "Fresh Start" program as an attempt to help financially distressed taxpayers. But the problem we have is that, similar to all other IRS announcements, this one also claims that they are always on your side. But they aren't and the fact is, they don't have to be.
Let's find out which of the three main IRS Fresh Start programs is actually the most helpful for resolving your tax problems.
1. IRS Fresh Start for Tax Liens
The first one is the IRS Fresh Start Federal Tax Lien program. The IRS claims that the new standard for Notice of Federal Tax Lien filing is in the taxpayers' favor as it has raised the minimum liability for filing a tax lien from $5,000 to $10,000; this sounds good. But it is pretty much useless. And what is there for the IRS to secure something from people when they don't have anything to pay? It will only serve to ding your credit score by 100 points or more and make it difficult to get approval for new credit to repay the IRS. The new change is not retroactive and the IRS cannot automatically withdraw a previously filed lien. Rating: Two thumbs down; a highly ineffective program.
2. Installment Agreement and the Fresh Start Program
The next program is the IRS installment payment plans. If you owe $50,000 or less in combined tax, interest, and penalties, you can participate in an installment plan by providing minimal financial information to the IRS (if you owe less than $25,000, you do not have to submit anything). The timeline for paying under the streamlined installment agreement has been increased to 72 months. Rating: Good.
If you owe more than $50,000, you need to complete Form 433-F, the Collection Information Statement. You have to conduct a lot of negotiations with the IRS over a reasonable monthly plan as the payment amounts are at the discretion of the IRS representatives.
3. Fresh Start Offer in Compromise
This definitely stands out as the best IRS Fresh Start program to settle back taxes for less than you owe. The IRS has now added more flexibility when calculating a taxpayer's ability to pay when requesting relief under an Offer in Compromise. One significant change is in the calculation of the taxpayer's reasonable collection potential. The IRS looks at only two years of future income for offers paid within 24 months, which is a reduction from five years. The changes allow more individuals to qualify for OIC programs, providing them with a new opportunity to resolve their tax debts with the IRS. Rating: An excellent program. Go and make full use of this opportunity.
Dealing with the IRS
The IRS Fresh Start Program has opened the doors to new possibilities to resolve back tax problems, but it should be utilized in the right way. You should understand that knowing all the details pertaining to the new Installment Agreement policy or having an IRS Offer in Compromise accepted remains challenging for many people. There is no guarantee that the new relaxed policies will stay forever, so there is no better time than now to start negotiating with the IRS.
This is when a tax attorney can play a significant role. A qualified tax resolution attorney can help you take advantage of the IRS Fresh Start program and conduct all the negotiations with the IRS to put your tax problems behind you.

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