Americans are looking for a solution to their debt problems this tax season, with a spike of 566 percent in search volume for the term “IRS Fresh Start Program” in late April.
According to a study by Ideal Tax, Google Trends reports showing a massive spike in American searches for the “IRS Fresh Start Program Requirements,” a Federal tax relief program to provide solutions to Americans struggling with debt this tax season.
What is this program that many Americans are looking to take advantage of this year?
IRS Fresh Start Program Support
The IRS Fresh Start program began in 2011 as a way to support taxpayers during the economic downturn. Over the years, it has been revised and now offers four different funding streams depending on the type of relief required by the individual or business in question.
The program relieves collections for things like tax liens or financial penalties typically charged for outstanding debts from taxes.
A spokesperson for Tax Relief Professionals at Ideal Tax says, “The IRS has forgiven millions of Americans, giving them financial freedom from tax debt. While certain criteria need to be met to qualify, the Initiative can be extremely beneficial in helping to prevent debt worsening.”
They go on to mention, “If an individual or business with substantial debt does not participate, the consequences can be severe, resulting in various penalties and interest fees. Additionally, taxpayers could be subjected to wage garnishments and liens.”
Types of Relief Offered
The Fresh Start program is not a one-stop shop for tax debt relief. The program is spliced into four distinct streams that offer individuals and small businesses solutions to pay back their taxes in more manageable ways.
The four program streams are an offer in compromise (OIC), installment agreements, currently non-collectible, and penalty abatement.
“With several different programs on offer, it is imperative to pick the program that best suits your financial situation,” says Ideal Tax spokesperson.
To choose the correct program stream for your unique situation, individuals and businesses can review the following four options.
As the name suggests, this program stream offers qualified individuals the chance to pay their taxes in monthly payments to the IRS in lieu of a lump sum at tax time. It is important to note that interest will continue to accrue on these outstanding tax balances.
This option is the most popular stream of the four offered under the Fresh Start banner.
Offer in Compromise (OIC)
The second stream in the Fresh Start program is called Offer in Compromise, or OIC. OIC is a difficult stream to qualify for but offers the most value to applicants as it generates a settlement amount at a reduced rate to your overall tax debt. Participants in the Offer in Compromise stream must pay the settlement amount instead of the original tax debt.
Currently Not Collectible Status
Currently, Not Collectible Status is the third option within the Fresh Start program offerings. This stream is also referred to as IRS Hardship Status and effectively postpones payments in the event that an individual cannot pay due to financial hardship.
Eligibility for this program is contingent on applicants proving that paying living expenses and back taxes will cause significant financial hardship. In this scenario, there is no tax settlement; applicants simply defer their payments to a later date.
Penalty Abatement is the fourth and final stream within the IRS Fresh Start program suite.
When back taxes are outstanding, the IRS charges individuals and businesses penalties for delayed payments. In the Penalty Abatement program, the IRS can forgive penalty fees associated with your taxes. This stream is difficult to qualify for but beneficial should you accrue significant penalties.
Although each stream within the IRS Fresh Start program has its own set of unique eligibility requirements, there are a number of universal requirements that all participants must meet.
The eligibility requirements include (but are not limited to):
- For sole proprietors: income has dropped by 25%.
- Annual income for single-person households is below $100,000.
- An annual income of less than $200,000 and less than $50,000 in tax debt owed for two-person households.
- A clean history with zero missed payments with the IRS.
- Submission of Collection Information Statements such as Form 433.
- Ability to pay the tax liability within 60 months or before collection statutes expire.
“One thing that is important to add is to qualify for the Fresh Start initiative, you must be current on your tax filings with the correct withholding amount.” says Ideal Tax spokesperson.
A Caution on Independent Tax Debt Relief Support
“There are many scams out there that take advantage of unknowing people who are stressed about their tax issues, such as their credit card debt, trouble with mortgages, student loans, or filing for bankruptcy.”
“A red flag to look out for when you research or Google which sites you should use to help is if they lack positive reviews. Additionally, if a company makes drastic claims about how much cash it can save you and fails to mention a disclaimer about the eligibility requirements for IRS tax relief, you should question the agency’s legitimacy”, Ideal Tax spokesperson adds.
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