The IRS created The Fresh Start program in early 2011 to help aid struggling taxpayers. They expanded the program in early 2012 to provide even more relief for people who are mired in tax debt. Here are the relief programs offered under the original and the new Federal Fresh Start Program.
Taxpayers who were unemployed for at least a month in 2011 or before April 17, 2012 are exempt from failure-to-pay-penalties as long as they pay their taxes before the federal deadline. Additionally, taxpayers who qualify for this program can get a six-month extension before their taxes are due. The 2012 due date for the extension is October 15. This program is also available to anyone who is self-employed and experienced more than a 25% reduction in income.
If you cannot pay your entire tax bill before the federal deadline, you may qualify for an installment agreement that allows you to set-up a payment plan with the IRS. The only conditions are that you can own no more than $50,000 in taxes and you have to allow the IRS to withdraw money from your bank account every month. The penalties are for doing this are lower now, although you will accrue interest. Small businesses are also eligible for an installment agreement if they owe less than $50,000 dollars or they can lower their debt to under the $50,000 threshold.
Offer in Compromise (OIC)
You may actually be able to pay back less tax than you owe under the Fresh Start Program. The IRS determines OIC eligibility based on your income and personal assets. If the IRS feels you can pay your debt in full or with an installment agreement, you will not be eligible for the tax reduction.
If you do not pay your taxes, the IRS can put a lien on all the property you own. Starting in 2011, the IRS raised the dollar amount of taxes you owe before the file a lien. They also streamlined the lien withdraw process internally so that if you do encounter this problem, you can get the lien withdrawn quicker after you settle your debt. Additionally, if the IRS does put a lien on your property, you can have it removed it you enter into a payment agreement.
Believe it or not, the IRS is not out to get you. If you are having trouble paying your taxes, visit irs.gov. The IRS website is home to volumes of advice on how to deal with your tax problems including the forms you need and even a series of eight YouTube videos on how the IRS handles collection efforts. Do not wait until it is too late, visit the IRS website today and see what kind of help you qualify for.
About the Author: Julio Pasco is a personal consultant who helps his clients with budgeting and day to day tasks. He spends a lot of time looking for discount and coupons for area attractions so that his clients can learn to save while still enjoying life.
- Discharging Tax Debt Through Bankruptcy (2009tax.org)
- The Findings Of An IRS Watchdog (2009taxes.org)
What is the Federal Fresh Start Program?