Question 1

How do I know if I qualify for the IRS Fresh Start Program?

Accepted Answer

You likely qualify if you owe $50,000 or less in back taxes and can demonstrate financial hardship or inability to pay the full amount. The program is designed for taxpayers overwhelmed by tax debt who need realistic payment options. Key factors include your current income, necessary living expenses, asset values, and ability to pay. If you're facing wage garnishment, bank levies, or property seizure, you probably qualify for some form of relief. Even if you owe more than $50,000, you may still qualify for an Offer in Compromise or other relief programs. The only way to know for certain is through a professional evaluation of your specific situation. That's why All County Tax Resolution offers free consultations—to determine exactly which programs can help you and what kind of relief you can expect.

Question 2

What's the difference between an installment plan and offer in compromise?

Accepted Answer

An installment agreement lets you pay your full tax debt over time in monthly payments, typically 3-6 years. You still owe the entire amount, but you avoid aggressive collection actions while making payments. This works well if you can afford the monthly payment but just need more time. An Offer in Compromise actually reduces the total amount you owe—sometimes by 90% or more. The IRS accepts a lump sum payment that's less than your full debt, then forgives the rest. This is for taxpayers who truly cannot pay their full debt even over time. Which option works best depends on your income, expenses, assets, and total debt amount. Many people assume they need to pay everything they owe, but the IRS would rather collect something than nothing. A tax professional can run the calculations to show you exactly what you'd pay under each option.

Question 3

How long does the Fresh Start Program process take?

Accepted Answer

Most cases resolve within 30-60 days once all paperwork is submitted to the IRS. Simple installment agreements often get approved in 2-4 weeks. More complex cases like Offers in Compromise can take 6-12 months for final approval. The timeline depends on which relief program you're applying for and how quickly you can provide required financial documentation. The IRS has streamlined many processes under Fresh Start, but they still need complete financial information to make decisions. Working with a tax professional speeds up the process significantly because we know exactly what documentation the IRS needs and how to present your case for the best outcome. We also handle all communication with the IRS, so you're not waiting weeks for responses to letters or phone calls.

Question 4

Will I have to pay taxes on forgiven debt?

Accepted Answer

Debt forgiven through an Offer in Compromise is generally not taxable income if you were insolvent when the debt was forgiven. Insolvency means your total debts exceeded your assets—which is often the case for people who qualify for the program. You'll receive Form 1099-C showing the amount of debt forgiven, but you can exclude it from income by filing Form 982 with your tax return. This form documents your insolvency and excludes the forgiven debt from taxable income. This is one reason why working with a tax professional is crucial. We ensure you meet all requirements to avoid creating new tax problems while solving your current ones. We also help you stay compliant going forward so you don't end up back in the same situation.

Question 5

What happens if the IRS rejects my application?

Accepted Answer

If your initial application gets rejected, you have appeal rights and can resubmit with additional information. Many rejections happen because of incomplete financial documentation or calculation errors—problems that can be fixed and resubmitted. An experienced tax professional knows why applications get rejected and how to avoid common mistakes. We also know how to present your financial information in the most favorable light while staying completely honest and compliant with IRS requirements. Even if you don't qualify for your first choice of relief, there are usually other options available. For example, if you don't qualify for an Offer in Compromise, you might still get an affordable installment agreement or penalty abatement. The key is having someone who understands all available options and can pivot strategies when needed.

Question 6

Should I try to handle this myself or hire a professional?

Accepted Answer

You wouldn't go to court without a lawyer, so why face the IRS without a tax professional? The IRS has teams of trained agents whose job is protecting government interests—not helping you get the lowest possible settlement. DIY attempts often backfire because people don't understand IRS procedures, make calculation errors, or accept the first offer without negotiating. Tax professionals know how to present your case for maximum relief and can often get better outcomes than you'd achieve alone. The cost of professional help is usually far less than the money saved through proper negotiation. Plus, you avoid the stress of dealing with IRS agents directly and the risk of saying something that hurts your case. Most firms offer payment plans, so you don't need cash upfront to get professional representation.

IRS Fresh Start Program Craig, PA