Tax debt isn’t just a financial issue. It can become a debilitating emotional burden.
As of 2022, 18.6 million Americans owe the Internal Revenue Service (IRS) $360 billion in overdue taxes. People avoid dealing with it. They hope that their tax debt will be forgotten. “Let sleeping dogs lie,” they tell themselves. They’ll figure it out … later.
But the IRS doesn’t forget. Nor does it wait for long. Ignoring unpaid taxes can lead quickly to liens, wage garnishments, and even bank levies. When awakened, this old dog doesn’t just bark. It can bite. Hard.
The IRS Fresh Start Program was created to give taxpayers a second chance—and hope. If you qualify, it offers structured repayment plans and reduced penalties. In some cases, it can even give you a way to settle tax debt for substantially less than the full amount owed.
This isn’t a loophole or a workaround. It’s a legal way to resolve tax debt before the IRS takes drastic measures. Here we’ll explore the ins and outs of Fresh Start to solve tax debt and how best to use the program should you need it.
What Is The IRS Fresh Start Program?
Also known as the IRS Fresh Start Initiative, this program was started in 2011 by the government to provide a range of tax relief options designed to make managing your tax debt less stressful and more achievable.
Rather than being a one-size-fits-all fix, the Fresh Start Program, created by the Internal Revenue Service, is a collection of tailored tools aimed at giving taxpayers and businesses the support they need. If you’re struggling to pay back taxes, this initiative can help break down your debt into manageable payments, so you can take control of your finances without feeling stuck.
Benefits of the IRS Fresh Start Initiative Include:
- Prevention of tax liens being filed against a tax payer
- In some cases, removal of a tax lien that has already been placed
- Reduction in penalties and interest on penalties
- Payment Flexibility: Extended time frames without severe penalties
- No requirement to disclose income or assets to the IRS, which for some taxpayers will yield in a more affordable installment plan.
How IRS Fresh Start Solved Evan’s Tax Debt Problem
Evan had spent 15 years as a freelance videographer, traveling around the world for projects and juggling multiple clients. Taxes had always been something of an afterthought.
He paid when he could, but it wasn’t always on time. There did not seem to be serious consequences. But when a medical emergency suddenly prevented him from working for months and drained his savings, he missed a year of tax payments.
The IRS letters started arriving, with alarming frequency. He was shocked to discover that he owed Uncle Sam a whopping $37,000. At first, he ignored the problem, thinking he could fix it later. Then, one morning, Evan’s bank account was emptied—IRS had levied his funds.
Desperate, Evan researched solutions online and discovered the Fresh Start Program. With help from a tax relief specialist, he was able to reach a direct debit Installment deal that allowed him to pay down his debt over several years. The IRS agreed to lift its levy.
Evan is still pressed to pay his installment plan monthly, but he’s no longer waking up in a cold sweat of panic. He no longer worries that the IRS will garnish his next paycheck.
Ready to be free of tax debt? Call us today.
We Help With:
- IRS Fresh Start Application
- Tax Levies & Liens
- Wage Garnishment
- Asset Seizure
- Tax Preparation & Extensions
- IRS ‘Fresh Start’ Tax Program Qualification
- Offer-in-Compromise
- Currently Non Collectible Status
- Statute of Limitations Enforcement
- Filing Returns for Unfiled Years
- IRS Audit Defense
- Business & Personal Taxes
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Understanding the IRS Fresh Start Program
The IRS Fresh Start Program launched in 2011, offering repayment options to help struggling taxpayers. The program offers three primary solutions:
- Installment Agreements payable instead of a lump sum.
- Offer in Compromise (OIC) to settle tax debt for less than what is owed.
- Tax Lien Withdrawal after a direct debit installment plan is set up.
Which option works best depends on your income, total tax debt, and ability to pay.
Use our Fresh Start Calculator to determine your eligibility.
For over 15 years, our team of federally licensed & enrolled agents, tax attorneys, and accountants have all worked toward the common goal of helping people solve issues with both the IRS and state tax authorities.
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Is the IRS Fresh Start Program Legit?
There’s a lot of misinformation about the program. The “IRS Fresh Start Program” is legitimate, but taxpayers have been confused and pressured by tax relief companies who misuse the term to sell people on their services. Taxpayers may hesitate to apply because they believe one of these myths:
Myth: “The program erases tax debt.”
Truth: The IRS still expects payment, but may offer reduced settlements or better terms.
Myth: “Only low income taxpayers qualify.”
Truth: Middle-income taxpayers may qualify if they meet the program’s criteria.
Myth: “Applying triggers an IRS audit.”
Truth: An IRS review of your application won’t automatically get you audited.
Requirements To Qualify – IRS Fresh Start Program Eligibility
While the Fresh Start Program is accessible to many, you’ll need to meet specific criteria to qualify. Eligibility requirements:
1. Owing Less Than $50,000
Your total tax debt must be $50,000 or less. If your balance is higher, you could still qualify by paying down the amount owed to meet this threshold.
2. Demonstrated Financial Hardship
You’ll need to show proof of financial difficulty that prevents you from paying your tax debt in full. This typically requires submitting documentation about your income, expenses, and assets.
3. Compliance with Filing Requirements
Applicants must have all their tax returns filed promptly. If there are any unfiled returns, you’ll need to address them before enrolling in the program.
4. Consistent Payment History
Once enrolled, you’ll need to make timely payments as agreed. A history of consistency in managing payments also strengthens your eligibility.
5. Self-Employed Income Decline
If you’re self-employed, you must demonstrate at least a 25% decline in income to qualify for certain benefits, such as penalty relief.
Not sure if you meet the criteria? Tax Law Advocates can help clarify your eligibility and guide you toward the best solution for your situation.
The first step in applying for the IRS Fresh Start program is to complete our contact form, contact your tax attorneys, or contact your accountants to see if you qualify. While there are no income requirements, the IRS has certain eligibility requirements that must be met in order to qualify for the program. Ensure you meet these criteria before applying:
- You must have filed all required tax returns for the previous three years
- You must not owe more than $50,000 in taxes, including interest and penalties
- Do you owe more than $50,000 in back taxes? We can help. Contact us for information.
- You must agree to pay your taxes owed within six years
- You must have made all required estimated tax payments for the current year
- You must not have been involved in any tax evasion or fraud activities
If you meet all the above requirements, you can then complete the application for the IRS Fresh Start program. Tax Law Advocates will work with you to complete the necessary paperwork and help you submit it to the IRS. We will also help you keep track of your progress and ensure that you are on pace to successfully complete the program.
Reduce Tax Debt & Eliminate IRS Penalties With These Initiatives
The good news is that the Internal Revenue Service created initiatives to help taxpayers reduce their tax debt. One way to reduce your debt would be through a process called penalty abatement.
If you’re buried under a mountain of tax debt, our team at Tax Law Advocates will dive deep into those balances and figure out which penalties can be knocked out. This isn’t just about shaving off some numbers—it’s about slashing that balance so you can pay off your debt faster without wasting more money on interest. No income qualifications needed here. You need to talk to the tax pros at Tax Law Advocates to see how you can get those penalties eliminated and start moving toward financial peace.
Payment Plan Options
The IRS Fresh Start program offers several payment plans to help taxpayers pay off their taxes. There are two main types:
- Streamline Installment Plans
- Partial Pay Installment Plans
Streamline payment plans
Long-term payment plans allow taxpayers to pay their taxes over a period of time, usually up to 72 months, and, in some cases, even 84 months. What to know about the streamline payment plan:
– Up to 72 months for amounts under $50,000.
– Reduced terms for lower amounts (e.g., 60 months for $25,000 or less).
Partial payment plans
Partial payment plans allow taxpayers to make smaller payments over time while the interest and penalties accrue. Key things to know about the partial payment plan:
– Available for those who owe less than $100,000.
– Full payment is required within 120 days.
In many of these instances the tax debt could be reduced significantly by utilizing the statute of limitations. The statute of limitations is the expiration date of the debt. The IRS has a set period of time to collect on an installment plan, Tax Law Advocates will use this limitation by getting you a low enough payment, and allowing most of the debt to expire.
If you need help understanding the IRS Fresh Start program or applying for a payment plan, contact the professionals at Tax Law Advocates. We can help you understand your options and make sure you qualify for the best payment plan for your situation.
Who qualifies for a payment plan?
To qualify for a short-term payment plan, you must owe less than $100,000 in combined tax, penalties, and interest.
To qualify for a long-term payment plan, you must owe $50,000 or less in combined tax, penalties, and interest.
When a taxpayer has a tax debt over $100,000.00, getting a monthly payment or resolution in place is more difficult. That is why it is so important to make sure one has proper representation to ensure they are put in the best possible situation given the larger balance that is owed.
When Should You Apply for the IRS Fresh Start?
The longer you procrastinate, the worse the situation gets. The IRS adds penalties and interest daily. The sooner you enroll in Fresh Start, the faster you can stop penalties. With a little effort and a lot of patience, you can avoid liens and get a manageable payment plan.
If you’ve received IRS notices or worry about penalties, don’t delay. Now is the time to act. The Fresh Start Program only works if you take the first step and meets its requirements.
If you can’t do it yourself, don’t run away. Seek professional help. That assistance can save you down the road.
Getting Started with IRS Fresh Start Program
Many taxpayers don’t know what to do when the IRS notifies them that they owe a hefty sum. Many people panic. The prospect of liens, levies, and wage garnishments keeps them up at night. But avoiding the problem only makes it worse.
The good news? The IRS Fresh Start Program can provide relief—but you must apply correctly to get approved. Here’s how:
Step 1: Ensure Your Eligibility
Before you apply, check that you meet IRS Fresh Start Program requirements:
- Amount you owe: Debt must be $50,000 or less in taxes, penalties, and interest.
- Tax compliance: Your tax returns were filed, even if you didn’t pay in full.
- Financial hardship: You must prove that immediate full payment is impossible.
Step 2: Choose the Program Options Best for You
As noted, the IRS Fresh Start Program offers three primary channels for resolving tax debt: Offer in Compromise, Installment Agreement, and/or a Tax Lien Withdrawal
Each option has specific IRS forms and rules. Be careful or consult a professional. A considered and timely choice can avoid delays and rejections.
Step 3: Collect All Relevant Documents
Documentation to accompany Fresh Start applications includes:
- Tax returns: Copies of past tax filings
- Income Documents: Present all your income statements: W-2s, 1099s, etc.
- Bank statements: Recent statements showing available funds and transactions
- Expense records: Submit bills, rent/mortgage statements, insurance, etc.
Not providing accurate financial details is a major no-no. It’s the number one reason Fresh Start applications get delayed or denied. It can get you into more serious trouble.
Step 4: Submit Your Fresh Start Application
- For an Installment Agreement, use the IRS Payment Agreement online tool and file with Form 9465.
- For an OIC, use the IRS Pre-Qualifier Tool, then submit with Form 656 and documentation
- For Tax Lien Withdrawal after setting up an installment agreement, use Form 12277.
Step 5: Track Your Application Status
The IRS will review your request and may contact you for additional details. Here’s what to expect:
- 30-60 days for an Installment Agreement
- 6-12 months for an Offer in Compromise
- 30-90 days to Remove a Lien
Don’t wait If the IRS asks for more documents. Even brief delays can cause rejection.
Common Mistakes That Delay Fresh Start Approval
- Failing to file all past tax returns before applying.
- Overstating expenses or underreporting income, leading to discrepancies.
- Ignoring IRS requests for additional documentation.
- Applying for an Offer in Compromise without proof of financial hardship.
- Submitting incomplete IRS forms or missing key details.
Improving Your Chances of Approval
- Carefully review and check financial statements before submitting them.
- Ensure all tax returns are up to date before applying.
- Respond quickly to IRS requests for additional documents.
- Work with a tax professional if your case is complex or unclear.
Avoiding IRS Liens and Levies
For many people, IRS debt starts as a nagging worry—a letter here, a missed deadline there.
But the tax authorities don’t just send friendly reminders. If your tax debt goes unpaid, the IRS can garnish your paycheck, freeze or drain your bank account, or seize property.
Prevent these collection actions. Act before the IRS makes a move. Here’s how.
What Is a Tax Lien?
A tax lien is a legal claim against your assets. The IRS can apply a lien when you don’t pay what it says you owe. The authorities won’t take anything right away, but a lien can wreck your credit. That along can make your life difficult:
- Damages your credit score
- Makes it harder to secure loans or cards
- Remains on public record, affecting future job and rental applications
What Is a Levy?
A tax levy means that the IRS intends to seize your money or property to pay off your tax debt. This isn’t just a claim. A levy means your assets are at immediate risk:
- Bank Account Levies: Funds from your account can be frozen or withdrawn.
- Garnished Wages: Part of each paycheck may be deducted before you get it.
- Seized Property: Your cars, homes, or other assets may be taken.
Preventing IRS Actions with Fresh Start
Taxpayers avoid liens and levies. Here’s how:
- Set up an Installment Agreement to prevent liens and levies.
- Request Removal of a Tax Lien by entering a direct debit installment plan.
- Request an Offer in Compromise (OIC) if you qualify to settle your debt for less.
- Apply for CNC (Currently Not Collectible) Status if you can prove severe hardship.
Signs That the IRS Is About to Take Action
If you owe back taxes, watch out for these warning signs:
- Frequent IRS Notices: More letters mean escalating enforcement.
- CP504 Notice (“Final Notice Before Levy”): This means the IRS is preparing to seize assets.
- Letter 1058 (“Final Notice of Intent to Levy and Right to Appeal”): This is your last chance to prevent a levy.
Don’t let things reach this point. It only gets worse from here.
How the IRS Reviews Fresh Start Applications
Applying for a Fresh Start may feel like a step toward debt relief, and it is. But not so fast. Expect a long wait. The IRS doesn’t approve requests overnight.
Applications undergo a detailed review process to determine your eligibility for relief. Here’s what happens:
Step 1: Pre-Screening of Your Application
Before reviewing financial details, the IRS checks for basic eligibility:
- Tax compliance: Have all past tax returns been filed?
- Debt threshold: Is the total tax debt $50,000 or less?
- Lawful standing: Are you currently in compliance with tax laws?
- Financial hardship proof: Do you meet OIC hardship qualifications?
The IRS can reject your application if something is lacking, or it request more information.
Step 2: Reviewing and Verifying Your Application
For applications that pass pre-screening, the IRS verifies all financial details:
- Checking pay stubs, tax returns, and bank statements to verify reported income.
- Comparing claimed expenses (rent, food, insurance) to IRS national cost standards.
- Assessing asset value (vehicles, real estate, savings) to evaluate their liquidation.
If the IRS notices any inconsistencies, they may:
- Request more documents, delaying the process.
- Adjust repayment terms based on what they believe you can afford.
- Deny the request if it appears you can pay the full debt
Step 3: Application Decision
If the IRS approves your application, it will notify you, confirming the installment plan terms or settlement amount. You can take a deep breath. Then get ready to pay.
If the IRS rejects your application, you’ll receive a reason. These are the most common:
- Failing to submit all required tax returns before applying.
- Underreporting income or inflating expenses, leading to inconsistencies.
- Missing required financial statements, such as bank records or pay stubs.
- Applying for an OIC without proving hardship credibly or adequately.
- Recent tax penalties or IRS compliance violations.
The IRS will provide options for appealing the decision or submitting a new application.
How to Increase Your Application’s Chances
To increase your chances of Fresh Start approval:
- Ensure all tax returns are filed and current before applying.
- Provide accurate financial statements and supporting documentation.
- Respond quickly if the IRS requests additional information.
- Consult with a professional to avoid errors and do things right the first time.
Awaiting any IRS decision is stressful. But preparing thoroughly can expedite the process and achieve better results.
The Fresh Start Program was set up to help taxpayers, but it’s just a framework. Approval depends on submitting clear, accurate, and well-documented applications.
What If You Default on a Fresh Start Payment Plan?
Enrolling in the IRS Fresh Start Program can be a relief. But it’s hardly a free pass. The taxman expects to be paid on time. Miss a payment or fall out of compliance and your agreement can be terminated. You’ll face liens, levies, and garnishments again.
Knowing how to pre-empt of solve problems can keep the IRS at bay. Here are some tips:
What If a Payment is Missed?
If your payment is not made on time, the IRS typically will follow this procedure:
- First missed payment: The IRS sends a reminder notice, giving you a chance to catch up.
- Second missed payment: A warning letter arrives, stating your agreement is at risk of being canceled.
- CP523 Final Notice: If not immediately compliant, the IRS terminates your deal and resumes collection actions, often with greater intensity and ferocity.
What are the Consequences of Defaulting?
If the IRS terminates your agreement, they can take these immediate actions to collect:
- Reinstating tax liens: A lien damages your credit and stays on public record.
- Garnishing wages: A percentage will be deducted from each paycheck.
- Levying bank accounts: The IRS can freeze and seize your funds.
- Seizing property: In extreme cases, the IRS may seize cars, homes, or other assets.
Can you Reinstate a Defaulted Agreement?
If you default, act quickly to prevent harsh IRS actions:
- Contact the IRS right away, presenting a credible, verifiable reason for the default.
- Request an extension – the IRS may give you a chance to cover a missed payment.
- Request another agreement – If the IRS terminated your installment deal, you may be able to set up a new plan by filing Form 9465.
- Prove financial hardship – As noted, CNC status is a last resort to buy some time.
Step 4: Preventing Default Before It Happens
The best way to avoid default is to take preventative action. Here’s how:
- Set up automatic payments to avoid missed due dates.
- Monitor your tax account online to stay updated on your balance.
- Contact the IRS if you expect financial hardship—they may adjust your plan.
- Keep tax filings up to date—non-compliance can cancel your agreement.
What if You Owe More than Fifty Grand?
You may still qualify for IRS tax relief even if your tax debt exceeds $50,000, but it will be harder. Taxpayers owing more must provide additional financial documentation to qualify.
Options available to you may include installment agreements, but you’ll need to submit Form 433-F, detailing your income, assets, and expenses. An OIC may still be possible, but only if you can prove extreme financial hardship.
The IRS is more likely to file a tax lien or pursue levies for larger debts. Acting quickly is critical. Tax professionals may be able to help prevent aggressive collection actions and help you negotiate solutions. You need urgent help to avoid serious consequences.
Final Thoughts: Stay on Track to Tax Relief
The IRS Fresh Start Program can be a lifeline. But defaulting on a deal can undo all your progress. The IRS offers some flexibility here. But it won’t wait forever.
Don’t test your luck. By following the rules and acting promptly, you can avoid liens, levies, garnishments… or worse. The process isn’t especially easy, or fast, but it’s better than the alternatives. True to its name, this is a program that can help you start fresh.
Reach out to a tax forgiveness professional to explore your options for getting back on track.
