Question 1

Do I qualify for the IRS Fresh Start Program in Pennsylvania?

Accepted Answer

You likely qualify if you owe $50,000 or less in combined taxes, penalties, and interest, have filed all required tax returns, and can demonstrate financial hardship or inability to pay the full amount immediately.

Self-employed individuals in Wayne County need to show a 25% income decline to qualify for certain Fresh Start benefits. The program is specifically designed for taxpayers facing genuine financial difficulty, not those simply trying to avoid paying what they owe.

The key requirement is being current on all tax filings. If you have unfiled returns, we need to get those completed first before applying for any Fresh Start relief options.

Question 2

What's better - a payment plan or settling for less?

Accepted Answer

It depends entirely on your financial situation. Installment agreements let you pay your full debt over up to 72 months with manageable monthly payments. This works well if you can afford the payments but just need time.

An Offer in Compromise settles your debt for much less - sometimes 10-20% of what you owe. But the IRS only accepts these when you truly cannot pay the full amount, even over six years. They look at your income, expenses, assets, and future earning potential.

For many Honesdale residents dealing with both IRS debt and rising property taxes, we often find installment agreements provide the most realistic path to resolution while preserving their financial stability.

Question 3

Will IRS collection actions stop once I apply?

Accepted Answer

Collection actions typically pause once you're accepted into an approved Fresh Start program, including wage garnishments, bank levies, and new tax liens. However, protection doesn't begin until you're actually enrolled in the program.

During the application process, the IRS may continue collection efforts unless we request additional protective measures. Once you're in an approved installment agreement or your Offer in Compromise is accepted, those collection actions must stop.

The critical factor is staying compliant with your agreement terms. Missing payments or falling behind on current year taxes can restart all collection activities immediately.

Question 4

How long does Fresh Start approval take?

Accepted Answer

Streamlined installment agreements process fastest - typically 30-60 days since they require minimal financial documentation. These are available for taxpayers owing $50,000 or less and represent the most common Fresh Start resolution.

Offers in Compromise take much longer, usually 6-12 months or more. The IRS conducts a thorough financial investigation, often requests additional documentation, and may require updated information if processing takes too long.

Currently Not Collectible status can be granted within 30-90 days for taxpayers facing immediate financial hardship. Timeline depends heavily on how quickly you provide complete, accurate financial documentation.

Question 5

What if I can't make my Fresh Start payments?

Accepted Answer

Missing payments causes your agreement to default, which immediately reinstates all original IRS collection powers. They can resume wage garnishments, bank levies, and file new tax liens without additional notice.

You may get one opportunity to reinstate a defaulted agreement by catching up on missed payments and providing acceptable explanation for the default. However, the IRS isn't required to offer reinstatement - it's completely discretionary.

We strongly recommend direct debit payments to eliminate the risk of missed payments. The IRS prefers this method, and some Fresh Start benefits like lien withdrawal specifically require automatic payment enrollment.

Question 6

Does Fresh Start help with Pennsylvania state taxes?

Accepted Answer

The IRS Fresh Start Program only applies to federal tax debt. Pennsylvania has separate programs for state tax resolution, though they're not as comprehensive as the federal options.

We handle both federal and Pennsylvania state tax issues for our clients. Often, resolving federal taxes first creates leverage when negotiating with the state, since it demonstrates good faith effort to resolve all tax obligations.

Pennsylvania offers installment agreements, some penalty relief, and limited settlement options for state taxes. The key is coordinating both federal and state resolutions simultaneously so you're not solving one problem while another gets worse.

IRS Fresh Start Program Honesdale, PA