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 and can demonstrate financial hardship. The IRS looks at your income, expenses, and assets to determine what you can reasonably pay.For Germantown residents, this often means showing that your living expenses exceed your income or that paying the full debt would prevent you from meeting basic needs. If you're self-employed and experienced a 25% drop in income, or if you're single earning under $100,000 (or married earning under $200,000), you meet the basic qualifications.The real question isn't whether you qualify—it's which program gives you the best outcome. An offer in compromise might settle your debt for $5,000 when you owe $50,000, but an installment agreement might be easier to get approved. We analyze your complete financial picture to recommend the strongest approach.

Question 2

Can the Fresh Start Program really reduce my tax debt by 90%?

Accepted Answer

Yes, but it depends on your financial situation and the specific program you qualify for. The 90% reduction typically comes through an Offer in Compromise, where the IRS accepts less than the full amount owed.The IRS uses a formula based on your income, expenses, and assets to determine your "reasonable collection potential." If this amount is significantly less than your tax debt, you could see dramatic reductions. For example, if you owe $40,000 but can only afford to pay $4,000 based on your financial situation, the IRS might accept that lower amount.However, not everyone qualifies for such large reductions. Some people benefit more from installment agreements or penalty abatement. The key is having professional representation to present your case properly. The IRS rejects about 70% of offers that taxpayers file themselves, often because they don't understand the complex qualification requirements.

Question 3

What happens to IRS collection actions while my case is being processed?

Accepted Answer

Most collection activities stop immediately when we submit your application. This includes wage garnishments, bank levies, and new liens. The IRS is required to halt these actions while they review your Fresh Start application.This protection typically lasts throughout the review process, which can take 6-24 months depending on the program. If you're in an installment agreement, collections stop as long as you make your payments on time. For offers in compromise, you're protected during the entire negotiation process.However, the IRS can still file new liens in certain situations, and they'll continue adding interest to your debt. That's why it's crucial to get your application submitted quickly and correctly the first time. A rejected application means collections can resume immediately, and you've lost valuable time and protection.

Question 4

How long does the IRS Fresh Start Program process take?

Accepted Answer

Simple installment agreements can be approved in 30-60 days, while offers in compromise typically take 6-24 months. The timeline depends on the complexity of your case and how quickly you provide required documentation.Currently Not Collectible status can be granted relatively quickly if you clearly meet the hardship requirements. Penalty abatement requests are usually processed within 2-4 months. The key factor is having all your documentation organized and submitted correctly from the start.Delays usually happen when taxpayers try to handle the process themselves and make mistakes on the paperwork. Missing documents, incorrect financial statements, or failure to file required returns can extend the process significantly. Professional representation typically cuts the timeline in half because we know exactly what the IRS wants and how to provide it properly.

Question 5

Will applying for the Fresh Start Program hurt my credit score?

Accepted Answer

The Fresh Start application itself doesn't directly impact your credit score. However, the underlying tax debt and any existing liens are already affecting your credit, so the program often improves your situation rather than hurting it.If you have federal tax liens, successfully completing a Fresh Start program can lead to lien withdrawal, which removes the lien from your credit report entirely. This can boost your credit score significantly. Installment agreements also show creditors that you're actively resolving your tax debt.The bigger risk to your credit comes from not addressing your tax problem. Unpaid tax debt can lead to additional liens, levies on your accounts, and even seizure of assets. These actions devastate your credit score much more than proactively resolving the debt through the Fresh Start Program.

Question 6

What documents do I need to apply for the Fresh Start Program?

Accepted Answer

You'll need complete financial documentation including tax returns for the past 3-6 years, bank statements, pay stubs, and a detailed list of monthly expenses. The IRS wants to see your complete financial picture to determine what you can afford to pay.For offers in compromise, you'll also need Form 433-A (individuals) or 433-B (businesses), which requires detailed asset and income information. Installment agreements require Form 9465 and may require Collection Information Statements depending on the amount owed.The documentation requirements vary by program, and missing or incorrect paperwork is the most common reason applications get rejected. We handle all the paperwork preparation and submission to ensure everything is complete and accurate. This isn't the time to guess—one mistake can delay your case by months or result in a rejection that's difficult to appeal.

IRS Fresh Start Program Germantown, PA