Question 1

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

Accepted Answer

You may qualify for the Fresh Start Program if you meet these basic requirements: Owe $50,000 or less in taxes, penalties, and interest (or reduce your debt to this amount). Are current on all required tax filings. Can demonstrate financial hardship or inability to pay the debt in full without economic strain. The key is being current on your tax filings. If you have unfiled returns, you must file them first. Self-employed individuals may qualify with a 25% or more drop in income. The IRS looks at your current financial situation, not your past earning potential, which is good news if your income has decreased recently. We evaluate your specific situation during our free consultation. Many people think they don't qualify when they actually do. The IRS has made the program more accessible in recent years, so it's worth having a professional review your case.

Question 2

Can the IRS Fresh Start Program completely eliminate my tax debt?

Accepted Answer

Full forgiveness is rare but possible through an Offer in Compromise if you can prove that paying the full amount would create significant economic hardship. However, most taxpayers see relief through reduced penalties, lower monthly payments, or partial debt reductions. Complete elimination happens through Currently Not Collectible status or Offer in Compromise. With CNC status, the IRS agrees you cannot pay anything without causing undue hardship. Collection stops, and the debt may eventually expire under the statute of limitations. Offer in Compromise allows you to settle for less than you owe. An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability or doing so creates a financial hardship. We've seen settlements as low as 5-10% of the original debt, but it depends on your specific financial circumstances.

Question 3

How long does the Fresh Start Program application process take?

Accepted Answer

The processing time for applications under the Fresh Start Initiative can vary depending on the type of relief requested and the volume of applications the IRS is receiving. Generally, an Offer in Compromise can take anywhere from 6 to 12 months for the IRS to review and respond. Installment agreements typically process faster, often within 30-60 days. Currently Not Collectible status can be approved quickly if your financial hardship is clear and well-documented. The key is submitting a complete application the first time. While you wait, the IRS suspends other collection activities. This means no wage garnishments, bank levies, or asset seizures while your application is under review. However, interest continues to accrue, so it's important to act quickly once you decide to pursue Fresh Start relief.

Question 4

Will applying for the Fresh Start Program stop IRS collection actions immediately?

Accepted Answer

Yes, submitting a complete Fresh Start application typically stops most IRS collection activities. The IRS suspends other collection activities. Your legal assessment and collection period is extended. This includes wage garnishments, bank levies, and asset seizures. However, the IRS may still file a tax lien during the review process. The IRS may file a notice of federal tax lien. But existing levies must be released if they were placed after your application was received. The protection lasts throughout the entire review process, which can take several months. This breathing room is often exactly what taxpayers need to get back on their feet. You can focus on work and family instead of constantly worrying about the next collection action. Just remember that interest continues to accrue, so the sooner you resolve the debt, the better.

Question 5

What happens if my Fresh Start application gets rejected?

Accepted Answer

If the IRS rejects your application, you have appeal rights. Your offer is automatically accepted if the IRS doesn't make a determination within two years of the IRS receipt date. (This does not include any appeal period.) Most rejections happen because of incomplete applications or insufficient financial documentation. The good news is that rejection doesn't put you in a worse position than before. Any payments you made during the review process get applied to your tax debt. Collection protections remain in place during the appeal process if you file within 30 days. We've successfully appealed many rejected applications by addressing the IRS's specific concerns. Sometimes it's just a matter of providing additional documentation or clarifying your financial situation. The key is understanding why the application was rejected and responding appropriately.

Question 6

Do I need a tax professional to apply for Fresh Start relief?

Accepted Answer

While you can apply on your own, dealing with the IRS isn't always straightforward, and one wrong move can slow down or derail your progress. Working with a tax attorney or licensed professional can increase your chances of approval and ensure your application is submitted correctly. The IRS forms are complex and require detailed financial information. You'll likely encounter forms like Form 656 for an Offer in Compromise or Form 9465 for an Installment Agreement. Make sure to read the instructions carefully and fill them out completely. For instance, when completing Form 656, you'll need to provide detailed information about your financial situation, including your assets, liabilities, and monthly income. Would you go to court without a lawyer? Of course not! Then why would you go before the IRS without a trusted tax professional? We know which arguments work, how to present your case for maximum impact, and how to avoid the common mistakes that lead to rejection. The investment in professional help often pays for itself through better outcomes and faster resolution.

IRS Fresh Start Program Kimble, PA