Question 1

How much can the IRS Fresh Start Program actually reduce my tax debt?

Accepted Answer

The reduction depends on your financial situation and which Fresh Start option you qualify for. With an Offer in Compromise, eligible taxpayers can settle for significantly less than they owe - sometimes 90% or more in savings. Installment agreements don't reduce the principal debt but stop penalties and interest from growing while you pay over time. Penalty abatement can eliminate thousands in penalties if you have a clean compliance history and faced unexpected hardship. The key is having a tax professional evaluate your complete financial picture to determine which option gives you the maximum benefit. Most people don't qualify for the dramatic reductions they see advertised, but legitimate savings are possible with proper representation.

Question 2

Do I need a tax professional or can I apply for Fresh Start myself?

Accepted Answer

You can apply yourself, but it's risky. The IRS has specific requirements for each Fresh Start option, and one mistake can get your application rejected. You'd then have to wait and reapply, during which time penalties and interest keep growing. Tax professionals know exactly what documentation the IRS wants and how to present your financial information in the best light. We understand the difference between what disqualifies you versus what makes your case stronger. Would you go to court without a lawyer? Of course not. Then why would you go before the IRS without a trusted tax professional? The stakes are too high to risk getting it wrong the first time.

Question 3

What happens to IRS collection activities while my Fresh Start application is pending?

Accepted Answer

The IRS generally suspends most collection activities while they review your Fresh Start application. This means no new liens, levies, or garnishments while your case is pending. However, this protection isn't automatic. You need to submit a complete, properly prepared application to trigger the collection suspension. Incomplete applications or those missing required documentation don't receive this protection. Interest continues to accrue on your debt during the application process, but you're protected from aggressive collection actions. This breathing room is crucial for getting your finances organized and working toward a permanent solution.

Question 4

How long does the IRS Fresh Start application process take?

Accepted Answer

Processing times vary by the type of relief you're requesting and the IRS's current workload. Installment agreements typically take 30-60 days for approval. Offer in Compromise applications can take 6-12 months or longer. The IRS has two years to make a decision on your Offer in Compromise. If they don't respond within that timeframe, your offer is automatically accepted. However, this doesn't include any appeal periods. Having a tax professional handle your application often speeds up the process because we know exactly what the IRS wants and can respond quickly to any requests for additional information. We also know when to follow up to keep your case moving.

Question 5

What are the income limits for qualifying for the Fresh Start Program?

Accepted Answer

There aren't strict income limits for all Fresh Start options, but your income affects which programs you qualify for and what terms you'll receive. For streamlined installment agreements, you generally need to owe $50,000 or less and demonstrate ability to pay within 72 months. Offer in Compromise looks at your ability to pay based on income, expenses, and assets. The IRS uses specific formulas to determine what you can reasonably pay. Higher income doesn't automatically disqualify you if you have legitimate expenses and financial hardship. Each situation is unique. Self-employed individuals, people with irregular income, and those facing medical expenses or other hardships may qualify even with higher incomes. The key is properly documenting your financial situation and presenting it correctly to the IRS.

Question 6

Will the Fresh Start Program affect my credit score?

Accepted Answer

The Fresh Start Program itself doesn't directly impact your credit score, but existing tax liens and levies certainly do. One major benefit of the program is that it can help you avoid new liens or get existing ones released. The IRS increased the threshold for filing liens from $5,000 to $10,000 under Fresh Start. We also made it easier to get liens withdrawn after setting up direct debit installment agreements or paying down your balance. Successfully completing a Fresh Start program can actually improve your credit by resolving tax liens and stopping collection activities. However, any existing liens will remain on your credit report until properly released, which is another reason to work with professionals who know how to get liens withdrawn as part of your resolution.

IRS Fresh Start Program Aberdeen, PA