Question 1

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

Accepted Answer

The amount varies significantly based on your financial situation, but many taxpayers see reductions of 50% to 90% of their total debt. The key factor is demonstrating that paying the full amount would create genuine financial hardship.For an Offer in Compromise, the IRS calculates what you can realistically pay based on your income, expenses, and asset equity. If that amount is substantially less than what you owe, they'll often accept it as full payment. We've helped clients settle $30,000 tax debts for $3,000, and $75,000 debts for $8,000.Penalty relief is another major source of savings. The IRS adds penalties and interest aggressively, sometimes doubling or tripling the original tax owed. First-time penalty abatement and reasonable cause relief can eliminate these entirely for qualifying taxpayers.

Question 2

Do I qualify for the Fresh Start Program if I owe Pennsylvania state taxes too?

Accepted Answer

The IRS Fresh Start Program only applies to federal tax debt, but having state tax debt doesn't disqualify you from federal relief. In fact, many of our Pennsylvania clients have both federal and state tax problems.We can help you address both simultaneously. Pennsylvania has its own payment plan and settlement options, though they're generally less generous than federal programs. The key is handling them in the right order to maximize your overall savings.Often, resolving your federal debt first frees up cash flow to address state obligations. Pennsylvania's Department of Revenue tends to be more flexible when they see you're actively resolving your tax problems rather than ignoring them.

Question 3

How long does the Fresh Start Program application process take?

Accepted Answer

Most Fresh Start applications take 6 to 12 months for the IRS to process, but collection activities typically stop within 30 days of submitting a complete application. This gives you immediate relief from wage garnishments, bank levies, and collection notices.The timeline depends on which program you're applying for and how complex your financial situation is. Installment agreements usually get approved fastest—often within 30 to 60 days. Offers in Compromise take longer because they require more extensive financial documentation and review.During the application period, you're protected from most IRS collection actions. We stay in regular contact with the IRS to track your case status and address any questions that arise. You'll know exactly where things stand throughout the entire process.

Question 4

What happens if the IRS rejects my Fresh Start Program application?

Accepted Answer

IRS rejection rates are high for taxpayers who apply without professional help—often 70% or higher. But rejections aren't final. You have appeal rights, and we can often address the IRS's concerns and resubmit a stronger application.Common rejection reasons include incomplete financial documentation, mathematical errors, or failing to demonstrate genuine financial hardship. These are technical issues we know how to avoid. We've seen cases where taxpayers were rejected twice on their own, then approved after we restructured their application.Even if your first application doesn't succeed, the process gives us valuable information about how the IRS views your case. We can adjust our strategy, gather additional documentation, or explore alternative programs. Very few tax situations are truly hopeless—it's usually a matter of finding the right approach.

Question 5

Can I apply for the Fresh Start Program if I have unfiled tax returns?

Accepted Answer

You must be current on all required tax filings before the IRS will consider any Fresh Start application. This is a firm requirement—no exceptions. But having unfiled returns doesn't mean you can't eventually qualify.We help clients get caught up on unfiled returns as the first step in the process. Often, preparing those returns reveals refunds or lower balances than expected, which can improve your Fresh Start options significantly.The IRS typically requires three years of filed returns before considering payment plans or settlement offers. We can prepare and file multiple years of returns simultaneously, then immediately transition into your Fresh Start application. This streamlined approach gets you to relief as quickly as possible.

Question 6

Will applying for the Fresh Start Program hurt my credit score?

Accepted Answer

The Fresh Start Program application itself doesn't directly impact your credit score. However, the underlying tax debt may already be affecting your credit if the IRS has filed tax liens.One of the program's benefits is lien withdrawal. Once you complete a payment agreement or settlement, the IRS will often withdraw existing tax liens, which can improve your credit score significantly. This is a major advantage over simply ignoring the debt.Tax liens are public records that can drop your credit score by 100 points or more. Getting them withdrawn through the Fresh Start Program not only resolves your IRS problem but also helps restore your creditworthiness for future loans, mortgages, and other financial needs.

IRS Fresh Start Program Brandt, PA