Question 1

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

Accepted Answer

The reduction depends on your specific financial situation and which program you qualify for. Offers in Compromise can reduce tax debt by 90% or more for eligible taxpayers who demonstrate they cannot pay the full amount.Penalty abatement can eliminate thousands in penalties, while installment agreements spread payments over time without reducing the total debt. Currently Not Collectible status doesn't reduce what you owe but stops collection activities until your financial situation improves.The key is proper qualification and documentation. Many taxpayers who try to apply on their own get rejected because they don't understand the complex requirements or submit incomplete applications.

Question 2

Do I qualify for the Fresh Start Program if I owe $50,000 or less?

Accepted Answer

Owing $50,000 or less makes you eligible for streamlined installment agreements, which are easier to obtain and require less financial documentation. However, qualification for other Fresh Start options depends on more than just the amount you owe.The IRS looks at your ability to pay based on your income, necessary expenses, and asset equity. You must also be current on all required tax filings and demonstrate genuine financial hardship for programs like Offers in Compromise.Self-employed individuals may qualify with a 25% or greater drop in income. The IRS has specific formulas and guidelines that determine eligibility, which is why professional evaluation is crucial before applying.

Question 3

How long does the Fresh Start Program application process take?

Accepted Answer

The timeline varies significantly depending on which program you're applying for and how complete your application is. Streamlined installment agreements can be approved within 30-60 days if properly submitted.Offers in Compromise typically take 6-12 months or longer, as the IRS conducts a thorough financial investigation. During this time, collection activities are generally suspended, giving you breathing room.The process moves faster when you have professional representation and submit complete, accurate documentation from the start. Incomplete applications get rejected, forcing you to start over and extending the timeline significantly.

Question 4

Will the IRS accept my Offer in Compromise application?

Accepted Answer

The IRS accepts roughly 40% of Offer in Compromise applications, but the acceptance rate is much higher when applications are properly prepared by experienced professionals. The key is demonstrating that you cannot pay the full amount owed without causing economic hardship.The IRS uses specific formulas to calculate your reasonable collection potential based on your income, expenses, and assets. Your offer must equal or exceed this amount to be considered. Many DIY applications fail because taxpayers don't understand these calculations.Professional representation significantly improves your chances because we know how to present your financial information in the most favorable light while staying within IRS guidelines. We also know which expenses the IRS allows and how to document them properly.

Question 5

Can I set up a payment plan while my Fresh Start application is pending?

Accepted Answer

Yes, you can often establish a temporary payment arrangement while your Fresh Start application is being processed. This shows good faith to the IRS and can prevent additional collection actions during the review period.For Offer in Compromise applications with periodic payment options, you're actually required to continue making monthly payments while the IRS reviews your case. These payments are applied to your tax debt if the offer is rejected.The key is not making payments that could hurt your case. For example, making large payments might indicate you have more ability to pay than your application claims. Professional guidance ensures your payment strategy supports rather than undermines your Fresh Start application.

Question 6

What happens if my Fresh Start Program application gets rejected?

Accepted Answer

If your application is rejected, you have appeal rights and can often reapply with additional documentation or under different circumstances. The IRS must provide specific reasons for rejection, which helps identify what needs to be corrected.Many rejections occur due to incomplete applications, mathematical errors, or failure to demonstrate financial hardship adequately. These issues can often be addressed and corrected with professional help.You may also qualify for different Fresh Start options even if one gets rejected. For example, if your Offer in Compromise is denied, you might still qualify for an installment agreement or Currently Not Collectible status. The key is having an experienced representative who understands all available options and can pivot strategies when needed.

IRS Fresh Start Program Nay Aug, PA