Question 1

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

Accepted Answer

You qualify for Fresh Start options if you owe $50,000 or less in combined tax, penalties, and interest, and can pay the balance within six years. For offers in compromise, qualification depends on your ability to pay based on income, necessary expenses, and asset equity.The IRS uses a specific formula to calculate your reasonable collection potential. If you can't pay the full amount owed before the collection statute expires, you may qualify for debt reduction. Currently-Not-Collectible status requires proving you can't afford basic living expenses plus any tax payment.We evaluate your complete financial picture during your free consultation to determine which options apply to your situation. Most taxpayers qualify for at least one form of relief, even if they don't meet offer in compromise requirements.

Question 2

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

Accepted Answer

Debt reduction varies significantly based on your financial circumstances. Offers in compromise can eliminate 90% or more of what you owe if the IRS determines you can't pay the full amount. The average accepted offer settles for about 15-20% of the original debt.Penalty abatement typically removes 25-40% of your total balance since penalties often make up a large portion of tax debt. First-time penalty abatement can eliminate all penalties if you've been compliant for the past three years. Reasonable cause abatement removes penalties when circumstances beyond your control caused the filing or payment problems.Installment agreements don't reduce the principal amount owed but stop additional penalties and reduce interest rates. Currently-Not-Collectible status doesn't reduce debt but halts collection while you're experiencing financial hardship. The key is choosing the right combination of options for maximum benefit.

Question 3

What happens if I don't file missing tax returns first?

Accepted Answer

The IRS won't consider any Fresh Start Program application until you're current with all required tax returns. They view unfiled returns as ongoing non-compliance, which disqualifies you from relief programs. Collection actions continue and may escalate while returns remain unfiled.Missing returns also prevent accurate calculation of your total tax liability. The IRS may have filed substitute returns on your behalf, often resulting in higher tax assessments than you actually owe. You can't dispute these amounts or claim deductions and credits without filing proper returns.We help clients prepare and file all missing returns before submitting Fresh Start applications. This ensures accurate liability calculations and demonstrates good faith compliance to the IRS. Most relief programs require maintaining current filing status going forward, so getting caught up is essential for long-term success.

Question 4

How long does the Fresh Start Program application process take?

Accepted Answer

Simple installment agreements for amounts under $50,000 typically get approved within 30-60 days through the streamlined process. You can often set up payment arrangements online or by phone without extensive financial documentation.Offers in compromise take 6-12 months for the IRS to review and decide. The process involves detailed financial analysis, asset verification, and sometimes multiple rounds of negotiation. Complex cases with business assets or disputed liability can take longer.Penalty abatement requests usually get resolved within 2-4 months. First-time penalty abatement often gets approved quickly since it's largely automatic for eligible taxpayers. Currently-Not-Collectible status can be granted within 30-90 days once you submit required financial statements. We track all applications and follow up regularly to prevent unnecessary delays.

Question 5

Can the IRS reject my Fresh Start Program application?

Accepted Answer

Yes, the IRS can reject applications that don't meet program requirements or lack proper documentation. Common rejection reasons include insufficient financial hardship for offers in compromise, incomplete paperwork, or failure to stay current with ongoing tax obligations during the application process.Installment agreement rejections usually occur when proposed payment amounts are too low or when you have a history of defaulting on previous agreements. The IRS expects payments that will satisfy the debt before the collection statute expires, typically within 6-10 years.Rejection doesn't end your options. We can resubmit applications with additional documentation, appeal decisions, or pursue alternative relief programs. Many initially rejected cases get approved after addressing the IRS's specific concerns. Having professional representation significantly improves approval odds since we know exactly what documentation and arguments the IRS requires.

Question 6

What if I can't afford the payment plan the IRS proposes?

Accepted Answer

You're not stuck with the IRS's initial payment proposal. We negotiate based on your actual financial capacity, not what the IRS thinks you should pay. The streamlined installment process allows automatic approval for payments that satisfy the debt within six years, but we can request longer terms for genuine hardship cases.If you truly can't afford any payment, Currently-Not-Collectible status stops collection actions entirely. You'll need to prove that making any tax payment would prevent you from covering basic living expenses like housing, food, transportation, and medical care.We can also combine multiple relief options for better results. For example, penalty abatement reduces your total balance, making installment payments more affordable. Partial payment installment agreements let you pay less than the full amount owed when the collection statute expires before full payment. The key is presenting a complete financial picture that supports your request for favorable terms.

IRS Fresh Start Program Dunmore, PA