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What is the IRS Fresh Start Program?

Key takeaways:

  • The IRS Fresh Start Program helps struggling taxpayers manage their tax debt without increasing their financial hardship.

  • A Collection Information Statement is a financial document that allows the IRS to evaluate the income and expenses of wage employees and self-employed individuals.

  • The IRS Fresh Start Program aids in tax relief through installment agreements, offer in compromise, currently non-collectible status, penalty abatement, federal tax lien avoidance, levy avoidance, and wage garnishment avoidance.

  • You must provide thorough financial documentation and be up-to-date on all tax filings to qualify for the IRS Fresh Start Program.

  • Few things in life are more stressful than being saddled with tax debt. No one wants the IRS to come knocking on their door demanding they pay a hefty tax bill or a dreaded audit. Luckily enough for those of us who find ourselves with tax debt, the Federal Government of the United States deployed the Fresh Start program back in 2011. The IRS developed this initiative to provide tax relief to certain taxpayers who owed taxes, and while it may seem confusing to navigate, with the help of a tax professional like Ideal Tax, you can combat your financial hardship and resolve your tax issues.

You might be wondering: What is the fresh start program with the IRS? What are my options? The Fresh Start program initiated by the IRS aims to help taxpayers manage their tax debt. One of the main goals of the IRS Fresh Start program was to combat predatory collection practices, such as financial penalties and tax liens, used by the Federal Government to punish individuals and small businesses with outstanding tax debts that they haven’t yet paid.

Moreover, the IRS doubled the threshold required for the IRS to file a notice of a federal tax lien. Therefore, the IRS Fresh Start initiative allows for a more graceful approach to achieving tax debt relief while avoiding a tax lien or levy.

What Are The Benefits?

The IRS Fresh Start program offers a breath of fresh air to those struggling who receive an unpaid tax bill and are already drowning in debts that we can’t afford to pay. Those with tax issues who are eligible to benefit from the IRS Fresh Start initiative may be able to reduce their tax debt by up to 90%. That amount of forgiveness can be life-altering by allowing eligible taxpayers to get back on track financially and begin to plan for a brighter and more secure future.

Let’s discuss options and run through a crash course on what an IRS Fresh Start entails and what you need for the IRS fresh start program qualifications.

How Does The Fresh Start Initiative Work?

Now that you know the answer to the question: What is the fresh start relief program, we’ll cover how the fresh start relief works? With the Fresh Start initiative, there are multiple ways for more taxpayers under financial hardship to obtain tax relief. For example, you can call, email, or fill out an IRS form on the IRS website.

To get the best chances of getting into the start fresh program, the tax professionals here at Ideal Tax can move you through the process and help you get into fresh start tax programs for resolving outstanding delinquent liabilities. Moreover, in the case of negligence in filing, they will be able to help you request penalty abatement.

Who is eligible?

Eligibility for the fresh start program must meet certain criteria:

  • You are a sole proprietor whose income has dropped by 25%.

  • Your yearly income is below $100,000. (single)

  • You have an annual income of less than $200,000 (married). You owe less than $50,000 in tax money.

Collection Information Statement

Collection Information Statements are a piece of financial documentation that allows the IRS to gather information from wage-earning taxpayers and self-employed individuals. The taxpayer provides financial information about their income and expenses, and if they are eligible for the IRS fresh start program, a settlement is agreed upon for a more manageable repayment structure to help them pay their debt.

There are multiple types of tax relief offered by the IRS Fresh Start Initiative program that provides either a direct payment structure or debt settlement to help a taxpayer resolve their tax issue. However, their tax filings must be up to date to be eligible.

The IRS Fresh Start program possesses four main programs that aid in tax debt relief:

Installment Agreements

As part of the fresh start that the IRS offers, installment agreements give qualified individuals the ability to make affordable monthly payments to the IRS as a method of helping them pay their taxes. These affordable payments are applied directly to reducing the determined tax debt until payments are no longer in arrears. The other good news is that once you are set up with installment payments under an installment agreement, you will no longer receive those nasty IRS collection letters.

However, the IRS can and will still charge you interest on the amount of tax debt you owe. After making your third direct debit installment agreement payment and your tax debt balance is below or drops below $25,000, you will be in a better position to prevent or help remove federal tax liens or a tax levy. You must keep up with your monthly direct debit payments once you have an affordable extended payment plan established.

The installment agreement for tax relief is considered the most popular fresh start program out of the entire IRS fresh start initiative.

tax return

Offer in Compromise (OIC)

Another option, such as the Offer in Compromise, also known as an OIC, permits qualified taxpayers to make a settlement based on a reduced amount that the IRS will accept in place of payment in full on owed tax debts. The ability to qualify for the OIC program is your best-case scenario for tax repayment options, as you can reduce your debt and ease your financial situation. However, eligibility guidelines for this method of tax debt reduction are stringent and saved for debt cases. 

Currently Non-Collectible Status

If an individual taxpayer is in dire straits and cannot afford to make any payments to the IRS for back taxes, they may qualify to get a status of “Currently Non-Collectable.” This does not absolve the person from debts owed but will halt collection activities. Eligibility for this form of tax relief is decided based on a person’s assets, current income, and monthly expenses and can help taxpayers manage their situation before paying what they owe in debt. Especially when you have debt from student loans, your monthly payment will be significantly higher.

The currently not collectible status is a beneficial program for any originally owed tax to the IRS. A non-collectible status helps taxpayers get their finances in order before paying back their outstanding tax debt. In some form, the non-collectible status is a program for creating a fresh start for your total debt and is widely used as a program to get fresh start tax relief.

However, to get into the fresh start program, a taxpayer must ensure that filings for the last six months are correct and filed. If a taxpayer fails to notify the IRS and assumes a non-collectible status to be active, additional penalties and interest are incurred on their IRS bill.

Penalty Abatement

If you have significant penalties with the IRS, there is a chance you could be eligible for the IRS fresh start penalty relief. When a taxpayer fails to file or fails to pay their taxes, they can accrue penalties that increase the debt that they must repay. As a form of tax relief, the final Fresh Start program offering is known as “Penalty Abatement.” If the IRS determines that you meet a strict set of requirements, they may absolve you of the penalties associated with your tax bill of up to $100.

When a taxpayer has to repay their debt through an installment plan with the IRS, and they fail to do so, they might incur extra interest charges. When aiming for a fresh start for your finances, a non-collectible status can help a taxpayer get their finances in order. Moreover, the most vital factor is to contact the IRS immediately since a taxpayer might be able to qualify for another program with the IRS.

Federal Tax Lien Avoidance

The Fresh Start program increased the amount a taxpayer needs to owe to $10,000 before the IRS can file tax liens. Under the right circumstances and depending on the outstanding debt, a tax lien withdrawal can reduce what an individual must pay to the IRS. A lien, however, does not arise anywhere. If the IRS imposes a lien on your name, they will send several notices.

Wage Garnishment Avoidance

When wage earners owe money to the IRS but fail to pay their debt, credit bureaus can issue wage garnishments in which money is taken directly from their paycheck. This affects the taxpayer’s future income until the lump sum of debt is paid in full, but with the help of the Fresh Start program, taxpayers can sometimes qualify for an offer in compromise or installment agreements that helps them pay back their debt to the IRS.

In addition, if you can provide sufficient evidence or reasonable cause for your financial hardship, you might qualify for the program of IRS penalty abatement.

How Do I Apply?

Documentation is critical when applying for relief through the Fresh Start Initiative Program, as the IRS will need to see evidence proving your need for such assistance. Therefore, your best course of action for getting into the fresh start program will be to find as much supporting evidence as possible to make a case for yourself. 

The documentation you may be asked to provide during the application process can include but is not limited to:

Finally, your tax filings must be up to date before you can qualify to reap the benefits of the Fresh Start initiative. That means that to get a fresh start, you must start filing unfiled tax returns or incomplete tax returns and ensure your current withholdings and estimated tax payments are correct.

What is the Timeline for the Program?

Firstly, if experiencing tax problems, everyone should first ask themselves the following questions: 

– What is currently in my bank account?

– What is the severity of my tax liabilities?

– What bills do I have to pay in what situations?

– Have I filed my last tax return?

Whenever you assess the content of these series of questions, you’ve gone through the first steps of finding a suitable resolution for your tax debt. 

When you’ve assessed that you or your business needs a solution on behalf of your current tax situation, you can use the qualifications of the internal revenue service to assess whether you have the option to participate in the fresh start program. From our experience, there is opportunity in many different forms, from deductions on your tax return you haven’t used, changes in your filing, and the ability to pay your loan back in installments. At your local office, they will always try to get you to pay the highest value back to the IRS, and sometimes it can be better to consult a tax professional an

The services we offer to clients include a detailed look at your company and the different qualifications for getting money back from your tax return. We hope to help you make a new beginning for your company (with consent) by clearing the debt and rebuilding equity. We’ve worked together with companies all over the US, regardless of location, or which state you are located in.

This is the basis/first step to getting into the first program. In fact, most of our accounts, especially in California and Massachusetts, have gotten significant decreases in their tax bills simply by reaching out to us without any cause for concern. We believe this to be the case because of Massachusetts’ complicated corporate tax code. 

After all the details are clear, the client will have to gather data and get the proper documents in order.

How The Program Works Today

While the Fresh Start Initiative Program saw expansion in 2012 so that more taxpayers could apply and qualify for tax relief, the most up-to-date adjustment to the program is an ease-up on the calculation of the taxpayer’s projected future income when an Offer in Compromise (OICs) is considered.

The Fresh Start tax program continues to see record numbers of applications and, in turn, an equally impressive number of approvals. The economic hardships inflicted on many families during the ongoing Covid 19 pandemic further amplified this trend. In addition, with a theoretical recession, more and more people will look to get into the fresh start tax program to get tax relief for outstanding tax debt.

Many taxpayers are still struggling with their tax returns, and financial woes as the pandemic winds down. The IRS is expected to continue its trend of lenient guidelines for a bit longer, but this will be coming to an end.

Do you know a taxpayer who could benefit from an Offer In Compromise?

If you or someone you know feels they may benefit from the Fresh Start program, now is the time to get your documentation in order so that you can apply and take advantage of all this program offers. The process of finding a fresh start tax program for your situation can be confusing and overwhelming despite all that we have covered, which is why tax help is often considered a viable option. Having tax experts on your side is the best way to help ease your worry and financial burden.

We recommend contacting one of the tax experts from Ideal Tax, who offer a free consultation to help you through the complexities so that you can have the best chance of approval for your Fresh Start with the IRS. In addition, a qualified tax professional could provide assistance by helping you get into one of the main programs for IRS debt relief and help you complete the request for penalty abatement or currently non-collectible status. 

If you have any questions about Ideal Tax’s services or wish to receive an update or assistance on your inquiry, don’t hesitate to reach out at our phone number: 1 (888) 720-0442 or navigate our website’s menu bar to read more IRS-related topics, on any device, anywhere. In addition, we would love for you to follow our Linkedin to stay up-to-date with the best tax tips in the field.

Employees may be liable for damages caused by failing to file a tax return with all the necessary documents. In addition, companies should let their accounting records be checked by a secondary tax professional. In many cases, the tax return has a slight mistake, and there are several benefits to be claimed by the client. If everything is in order, you ensure that there are no deductions, or refunds you can still claim from the IRS, and you will be clear of any future fees on your tax return.

We provide professional guidance to people whose lives have been affected by tax problems. To evaluate your specific tax issue and determine if you qualify for tax relief and the fresh start program, please contact us for a free consultation.
We are COVID-19 prepared, we will work with you over the phone and via e-mail. The content of this post does not replace the advice of a licensed tax professional.
Consult a qualified tax professional for questions specific to your circumstances.

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00:44 25 May 22
I have experienced nothing but kindness from this company. Being afraid the IRS was going to freeze my accounts Ideal Tax stepped in and took over. After a down payment I was able to set up monthly payments for the remaining balance. I receive weekly updates on my case. I am very happy with the way things are moving along.
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18:36 23 May 22
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11:39 21 Apr 22
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