Question 1

How much can the IRS Fresh Start Program actually reduce my tax debt?

Accepted Answer

The reduction depends entirely on your financial situation and which Fresh Start option you qualify for. Offers in Compromise can reduce debt by 90% or more for taxpayers who meet strict financial hardship criteria – we've seen six-figure debts settled for under $1,000 in legitimate cases.Penalty Abatement typically removes 25-40% of your total debt by eliminating late filing and payment penalties. Installment Agreements don't reduce the principal balance but stop penalties from accumulating and prevent collection actions. The key is having a professional evaluate your specific situation to determine which option gives you the best outcome, not just the most dramatic-sounding reduction.

Question 2

What happens if the IRS rejects my Fresh Start application?

Accepted Answer

Rejection isn't the end of the road – it's often just the beginning of the real negotiation process. Most initial applications get rejected for technical reasons: incomplete financial documentation, mathematical errors, or failure to meet specific IRS criteria that aren't obvious to taxpayers.When we handle your case, we know exactly what the IRS looks for and how to present your information in the most favorable light. If an initial application is rejected, we analyze the rejection letter, address the specific issues raised, and resubmit with corrections. We also know when to appeal IRS decisions and how to present additional evidence that can change their determination.The worst outcome is usually that you end up with a payment plan instead of debt reduction – which still stops collection actions and gives you manageable monthly payments you can actually afford.

Question 3

Do I qualify for the Fresh Start Program if I'm still working?

Accepted Answer

Yes, having a job doesn't disqualify you from Fresh Start programs – in fact, it often helps your case. The IRS wants to see that you have some ability to pay, whether through a reduced settlement or manageable payment plan.What matters is your overall financial picture: income versus necessary living expenses, assets versus debts, and whether paying your full tax liability would create genuine financial hardship. We've helped employed taxpayers qualify for significant debt reductions when their income barely covers basic living expenses, or when they have legitimate financial hardships like medical bills or family circumstances.Self-employed individuals may qualify if they can show a 25% or more drop in income. The key is presenting your financial situation accurately and completely, which is why professional representation makes such a difference in these cases.

Question 4

How long does the IRS Fresh Start Program process take?

Accepted Answer

The timeline varies significantly based on which program you're applying for and how complex your financial situation is. Installment Agreements for qualified taxpayers can be approved in 30-60 days. Offers in Compromise typically take 6-12 months from application to final acceptance, though the IRS has improved their processing times recently.Currently Not Collectible status can often be achieved within 60-90 days if you clearly meet the financial hardship criteria. Penalty Abatement requests usually get resolved in 2-4 months. The key factors that affect timing are having complete and accurate financial documentation, responding quickly to any IRS requests for additional information, and having experienced representation that knows how to avoid common delays.During this process, collection activities are typically suspended, so you get relief from garnishments and levies while your case is being reviewed.

Question 5

What documents do I need for a Fresh Start Program application?

Accepted Answer

The IRS requires comprehensive financial documentation, and missing or incomplete paperwork is the number one reason applications get rejected. You'll need three years of tax returns, current pay stubs, bank statements for all accounts, documentation of monthly expenses including rent/mortgage, utilities, food, transportation, and medical costs.For business owners, you'll also need profit and loss statements, business bank statements, and documentation of business expenses. Asset documentation includes property deeds, vehicle titles, investment account statements, and retirement account balances. The IRS also wants to see documentation of any debts you owe to other creditors.The challenge isn't just gathering these documents – it's presenting them in a way that supports your case for financial hardship. We help clients organize their paperwork and highlight the factors that strengthen their application while addressing any potential red flags before the IRS sees them.

Question 6

Can the IRS reject my payment plan once it's approved?

Accepted Answer

Once an installment agreement is officially approved and you're making payments as agreed, the IRS cannot arbitrarily cancel it. However, they can terminate the agreement if you miss payments, fail to file future tax returns on time, or if your financial situation improves significantly and you don't report it.The IRS also reviews payment plans periodically and may request updated financial information to ensure you're still paying the maximum amount you can afford. If your income increases substantially, they may require higher monthly payments. This is why it's important to structure your initial agreement realistically and maintain compliance with all tax obligations going forward.If you do encounter problems making payments, it's much better to contact the IRS proactively to modify your agreement rather than simply missing payments. Most payment plan modifications can be approved if you can demonstrate continued financial hardship or changed circumstances.

IRS Fresh Start Program Mount Pleasant, PA