Question 1

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

Accepted Answer

The reduction amount depends on your specific financial situation and which Fresh Start option you qualify for. Through an Offer in Compromise, eligible taxpayers can reduce their debt by 90% or more of what they originally owed.For example, if you owe $25,000 but can demonstrate financial hardship, you might settle for $2,500 or less. Penalty abatement alone can save thousands by removing the failure-to-file and failure-to-pay penalties that compound monthly.The key is proper qualification and application. The IRS has strict requirements, and your chances of maximum relief depend heavily on how well your case is prepared and presented.

Question 2

What are the qualification requirements for Fresh Start Program relief in Pennsylvania?

Accepted Answer

You must owe $50,000 or less in combined taxes, penalties, and interest to qualify for streamlined installment agreements. All required tax returns must be filed and current. You need to demonstrate genuine financial hardship or inability to pay the full amount without economic strain.Self-employed individuals may qualify if they can show a 25% or more drop in income. Your payment history with the IRS also factors into eligibility—they want to see that you're committed to compliance going forward.For Offers in Compromise, the requirements are more stringent. The IRS must believe they cannot collect the full amount, and your offer must represent your reasonable collection potential based on your assets, income, and expenses.

Question 3

How long does the Fresh Start Program application process typically take?

Accepted Answer

Processing times vary by program type and IRS workload, but most applications take 6-12 months for a final decision. Installment agreements are typically approved fastest, often within 30-60 days if you meet the streamlined criteria.Offers in Compromise take longer because they require extensive financial documentation review. The IRS has up to 24 months to make a decision, though most are resolved within 12 months.During the application process, the IRS generally suspends collection activities, which means no new liens, levies, or garnishments while your case is pending. This protection alone provides immediate relief even before your application is approved.

Question 4

Will applying for Fresh Start Program relief affect my credit score?

Accepted Answer

The application process itself doesn't directly impact your credit score. However, existing tax liens that are already on your credit report will remain until they're resolved through the program.One significant benefit is that the Fresh Start Program raised the threshold for new tax liens from $5,000 to $10,000, meaning fewer taxpayers face this credit damage. Additionally, if you qualify for lien withdrawal after completing a payment plan, the lien can be removed from your credit report entirely.Successfully completing a Fresh Start program actually helps your credit long-term by resolving the underlying tax debt that could lead to more aggressive collection actions. It's much better to address tax problems through Fresh Start than to let them escalate to liens, levies, or wage garnishments.

Question 5

Can I apply for the Fresh Start Program if I haven't filed all my tax returns?

Accepted Answer

No, you must be current on all required tax filings before you can qualify for any Fresh Start Program relief. This is a firm IRS requirement—they want to see compliance before they'll negotiate on existing debt.However, getting caught up on unfiled returns is often the first step in our process, and it can actually work in your favor. Filing those returns starts the clock on various relief options and may reveal that you don't owe as much as you thought, especially if you had withholdings or are entitled to refunds.We help clients prepare and file all missing returns as part of our comprehensive approach. Once you're current, you immediately become eligible for Fresh Start relief, and the IRS views your recent compliance positively when evaluating your application.

Question 6

Should I try to handle Fresh Start Program applications myself or hire professional help?

Accepted Answer

While you can technically apply yourself, the success rates are significantly higher with professional representation. The IRS has voluminous rules and requirements, and one mistake can result in automatic rejection of your application.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 just as high, and the procedures are just as complex.Professional representation also means the IRS deals with us instead of you throughout the entire process. No more stressful phone calls, intimidating letters, or trying to navigate complex IRS procedures on your own. We handle everything while you get back to focusing on your life and family.

IRS Fresh Start Program Craigs Meadow, PA