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 combined taxes, penalties, and interest, and you're current on all required tax filings. The IRS also considers your ability to pay—if paying your full tax debt would create financial hardship, you're a strong candidate. Self-employed individuals who've experienced a 25% or more drop in income often qualify for additional relief options. Even if you owe more than $50,000, other Fresh Start provisions might still apply to your situation. The only way to know for certain is to have a qualified tax professional review your complete financial picture and tax history.

Question 2

What's the difference between an Offer in Compromise and installment agreement?

Accepted Answer

An Offer in Compromise lets you settle your entire tax debt for less than you owe—sometimes dramatically less. If approved, you pay the agreed amount and your remaining debt is forgiven forever. However, the IRS has strict qualification requirements and thoroughly investigates your financial situation. An installment agreement is a payment plan that lets you pay your full tax debt over time, typically 3-6 years. It's easier to qualify for, but you'll still pay the complete amount plus interest. The right choice depends on your financial situation, assets, and long-term ability to pay. Most taxpayers benefit from having a professional evaluate both options.

Question 3

How long does the Fresh Start Program application process take?

Accepted Answer

The timeline varies significantly based on which relief option you're pursuing and how quickly you can provide required documentation. Installment agreements often get approved within 30-60 days, while Offers in Compromise typically take 6-12 months for the IRS to review and decide. The key is getting your application right the first time. Incomplete or incorrect submissions get rejected and force you to start over, adding months to the process. Working with experienced tax professionals who know exactly what the IRS wants—and how to present your case in the best light—can dramatically speed up approval times.

Question 4

Will the IRS stop collection activities while my application is pending?

Accepted Answer

Yes, in most cases. Once you submit a complete Fresh Start application, the IRS typically suspends collection activities like wage garnishments and bank levies while they review your case. This gives you breathing room to get your finances organized without worrying about surprise seizures. However, the IRS may still file tax liens during this period, and they'll continue charging interest on your debt. If your application gets rejected, collection activities resume immediately. That's why it's crucial to submit a strong, complete application that maximizes your chances of approval the first time.

Question 5

What happens if I don't qualify for the Fresh Start Program?

Accepted Answer

Even if you don't qualify for Fresh Start relief, you still have options. The IRS offers other payment plans and hardship programs that might work for your situation. You might qualify for Currently Not Collectible status if you're facing genuine financial hardship, which temporarily stops all collection activities. Some taxpayers explore bankruptcy as a last resort, though tax debt is difficult to discharge. State tax relief programs might also be available. The important thing is not to give up or ignore the problem—tax debt doesn't go away on its own, but there's almost always a solution if you work with qualified professionals who understand all available options.

Question 6

Should I try to handle Fresh Start applications myself or hire professionals?

Accepted Answer

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 IRS rejection rate for self-prepared Offer in Compromise applications is over 60%, compared to much higher success rates when professionals handle the process. Tax professionals know exactly what documentation the IRS requires, how to present your financial information favorably, and what red flags to avoid. We also handle all communication with the IRS, protecting you from saying something that could hurt your case. The cost of professional representation is typically far less than the additional taxes, penalties, and interest you'll pay if your application gets rejected.

IRS Fresh Start Program Effort, PA