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 program you qualify for. Offers in Compromise can reduce debt by 90% or more for taxpayers who demonstrate genuine inability to pay. For example, if you owe $50,000 but can only afford $5,000 based on your income and expenses, the IRS may accept that lower amount as full settlement. Penalty Abatement typically removes 25-50% of your total debt by eliminating late fees and failure-to-pay penalties. Installment Agreements don't reduce the principal amount but stop penalties from accruing, preventing your debt from growing larger. The key is proving to the IRS that you genuinely cannot pay the full amount without causing economic hardship. This requires detailed financial documentation and proper presentation of your case.

Question 2

What happens if I owe more than $50,000 in back taxes?

Accepted Answer

You can still qualify for Fresh Start relief even with debt over $50,000. The $50,000 limit applies to streamlined installment agreements, which offer the simplest approval process. For larger debts, you'll need to provide detailed financial statements and undergo more thorough IRS review. Many taxpayers with higher debt amounts benefit from Offers in Compromise, which have no debt ceiling. We've helped clients settle debts of $100,000 or more for just a few thousand dollars when they qualified. Another option is making a partial payment to reduce your balance below $50,000, then applying for a streamlined agreement. For instance, if you owe $75,000, paying $25,000 upfront could qualify you for easier payment terms on the remaining balance.

Question 3

Will the IRS accept my offer or just reject it automatically?

Accepted Answer

The IRS rejects about 60% of Offers in Compromise, but most rejections happen because of incomplete paperwork or unrealistic offer amounts. When applications are prepared correctly with proper financial documentation, acceptance rates improve dramatically. The IRS uses specific formulas to calculate your "reasonable collection potential" based on your income, expenses, and assets. Your offer must equal or exceed this amount to be considered. We know these formulas and how to present your financial information in the most favorable light. Common rejection reasons include missing tax returns, incomplete forms, offers that are too low, or failure to make required payments during the review process. Professional preparation eliminates these basic mistakes and significantly improves your chances of acceptance.

Question 4

How long does the Fresh Start Program application process take?

Accepted Answer

Installment Agreements typically process within 30-60 days for streamlined applications under $50,000. More complex cases requiring financial review can take 3-6 months depending on IRS workload and how quickly you provide requested documentation. Offers in Compromise take longer, usually 6-12 months for a final decision. During this time, the IRS suspends most collection activities, giving you breathing room from levies and garnishments. Currently Not Collectible status can be approved within 30-90 days if you meet the hardship criteria. Penalty Abatement requests for reasonable cause typically process in 2-4 months. The timeline depends heavily on having complete, accurate paperwork from the start. Incomplete applications get rejected immediately, forcing you to restart the entire process.

Question 5

Can I apply for the Fresh Start Program myself without hiring help?

Accepted Answer

You can apply directly to the IRS, but the success rate for self-prepared applications is significantly lower. The IRS publishes general information about these programs, but they don't provide guidance on strategy or how to present your case most effectively. Professional representation matters because tax attorneys and enrolled agents understand the nuances that make or break applications. We know which expenses the IRS allows, how to document financial hardship, and what offer amounts are realistic for your situation. Consider this: would you represent yourself in court against a prosecutor? The IRS has teams of trained professionals reviewing your case. Having experienced representation levels the playing field and dramatically improves your chances of getting the relief you deserve.

Question 6

What if I haven't filed all my tax returns yet?

Accepted Answer

You must be current on all required tax filings before applying for Fresh Start relief. This is a strict requirement that the IRS won't waive. If you have unfiled returns, we help prepare and submit them as part of the overall resolution process. Don't let unfiled returns prevent you from getting help. Many people avoid filing because they can't pay what they owe, but this only makes the problem worse. The IRS adds failure-to-file penalties on top of failure-to-pay penalties, sometimes doubling your debt. We can prepare all missing returns quickly and often negotiate penalty abatement for the filing delays. Once you're current on filings, we immediately move forward with your Fresh Start application. Getting compliant actually strengthens your case by showing good faith effort to resolve your tax problems.

IRS Fresh Start Program East Lynn, PA