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IRS Fresh Start: A Way Forward for Unpaid Tax Burdens

IRS Fresh Start: a Way Forward for Unpaid Tax Burdens

In 2008, in response to the recession caused by the collapse of the housing market, IRS re-invigorated a program that had been called The Fresh Start Program for many years. The Fresh Start initiative is not a clean slate or a way to avoid paying taxes.  IRS is staunchly unsympathetic to those individuals and business owners who try to avoid paying taxes owed. Fresh Start is, instead, a way to eliminate fees and penalties and find a payment plan that works for your financial situation  to repay back taxes in full.

When back taxes are owed IRS can place leans on properties and lays on accounts.  Under the Fresh Start program a taxpayer can apply to have a lien removed if their tax burden is under $25,000.

If you have a heavy back-tax burden here are some steps you must take to apply for the Fresh Start initiative:

1:  Pay your current year’s taxes! Taxpayers applying for the Fresh Start Program cannot have a tax balance due.  IRS is looking for businesses whose tax burden was due to temporary hardship not for chronically delinquent taxpayers.

2: Check to see if you meet the following criteria:

    • Firstly, self-employed individuals must demonstrate a drop in their net income of 25 percent or greater
    • Secondly, earnings for married couples filing jointly must be under $200,000 per year, and single filers under $100,000 per year
    • Lastly, you must owe less than $50,000 dollars in taxes overall

3: Meet with a tax attorney to determine if you may qualify for an Offer in Compromise. Factors that will affect your eligibility are:

  • Credit worthiness: Having other accounts in collections can negatively impact your credit and ability to purchase a home, car, or apply for credit.
  • Accuracy and record-keeping:  Demonstrate the amount IRS claims that you owe is not correct. Reasons can include: tax preparation error, misunderstandings about .
  • Effective Tax Administration – when the IRS determines that paying the full amount owed would cause undue financial hardship, then they may agree to take less than the full amount owed.

If you have excessive back taxes for your business or family entity, reach out to the dedicated team at MIlikowsky Tax Law.  Our expertise in IRS negotiations can help to offset your tax burden and create options for your future.