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You've worked hard, but for whatever reason, you find that your tax debt cannot be paid on time and you don't know how to resolve it.

Owing the IRS for back taxes is a nightmare you never thought you would take part in. Yet, here it is. The penalties are accumulating and the threatening letters have arrived.

You're not alone. The IRS collects millions from taxpayers in penalties for failure to pay. Yet, many taxpayers are unaware that the IRS does have programs to help you get back on track.

Curious about the IRS Fresh Start Program? Check out our informative article for a helpful overview of what you need to know.

What Is the IRS Fresh Start Program?

In 2008, The United States experienced a housing crash. Even before the official declaration of a financial crash, many homeowners were struggling with inflatable interest rates on mortgages and finding themselves in financial distress.

The IRS started The Fresh Start Program in 2008 as an initiative to help its citizens who were struggling to pay taxes.

The Fresh Start Program was expanded in 2012 to offer more assistance for the unemployed and businesses that were still recovering from a struggling economy that began with the housing crash.

In simplest terms, The Fresh Start Program offers a few options for individuals and businesses to pay off back taxes over time. Each option has specific requirements and regulations that must be met in order to participate in this tax relief program.

Ways to Settle Back Taxes

First, understand that although sorting through forms and filing procedures can feel very cold and frustrating, the IRS is run by people. It is not a machine.

These are people who have financial responsibilities, too. If there is a reasonable way to assist you in legally reducing your tax burden or offer payment plans, the IRS wants to do it.

With that said, working with the IRS is challenging. If you have ever tried to file your taxes on your own, you know it is time-consuming and often confusing.

Much of the difficulty in trying to resolve a tax problem on your own is due to legal terminology that requires some study and knowing which forms to file correctly.

Now imagine negotiating your back taxes on your own..  It is strongly recommended that you consult with a tax professional who has experience with forms and filing requirements.

How Can You Qualify for Tax Relief?

Before you can begin to apply for payment plans or an OIC through the IRS Fresh Start Program, you must be in compliance. The following outlines your steps to qualify for tax relief.

  • Owe Less Than $50,000

To qualify for a repayment plan under the guidelines of The IRS Fresh Start Program, your tax debt must be under $50,000. This does not include an OIC. An Offer In Compromise can be submitted for any tax amount.

Businesses are also eligible to apply if they owe less than $25,000 and are able to meet monthly payments. The business must have employees.

  • First Time Delinquent Tax Payer

In order to receive some of the benefits given under repayment agreements, you must not be a repeat offender. This means opportunities to apply for removal of Federal Tax Liens and penalties will not be given.

  • Tax Filings Are Up To Date

This means that all of the years that have not been filed must now be up to date regardless of your ability to pay. The IRS will not accept an application for The Fresh Start Program until all filings are complete and accurate.

  • Maintain Compliance For 5 Years

If you are approved for an installment plan or OIC, you must continue to pay your taxes on time for the next 5 years.

If you fail to pay on time within 5 years, the IRS has the authority to find you out of compliance and reinstate the full amount previously owed. This includes the full-back tax, penalties, and interest.

Why Should You Consult With a Professional Tax Service?

The fact that you do owe back taxes and have not been able to resolve the amount owed and return to compliance with the IRS is a serious problem.

It may make you feel that you are in over your head. In truth, you are.

Gathering all of your necessary documents to file previous years' returns, following guidelines for late filing fees, and determining the correct forms to submit are going to be a lot of work and study on your part.

What happens if you submit forms incorrectly? Have you had tax notices reviewed to see if they are accurate? What if you enter into an agreement and do not fully understand the requirements and then default?

A professional who is experienced with various tax relief programs can help you to negotiate your tax debt with the IRS in a manner that is done right.

Knowing the law and your rights under tax relief is important to avoid future problems.

A qualified CPA can assist you with financial planning that keeps you on track. They can also help you with further negotiations if you fail to meet deadlines in your repayment agreement.

Keith
AICPA
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