IRS Fresh Start Program: FAQs & 2023 Updates

October 30th, 2023

What Is The IRS Fresh Start Program?

The IRS Fresh Start Program is an IRS initiative designed to help taxpayers with outstanding tax debt. This helps provide flexible tax relief options for settling their tax obligations. Some benefits include:

  • Lien Prevention: Safeguard your assets with reduced chances of a lien filed against you.
  • Debt Reduction: Significant reductions in penalties and potential interest waivers.
  • Flexible Payment Plans: Tailored options to fit your financial situation.
  • Professional Guidance: Access to expert advice for a smooth resolution process.
  • Financial Freedom: Achieve peace of mind by settling outstanding tax debts.

We Provide Assistance With:

  • Tax Filing and Extension Services
  • Guidance for IRS ‘Fresh Start’ Program Eligibility
  • Addressing Wage Garnishment
  • Filing for Unfiled Tax Years
  • Defense Strategies for IRS Audits
  • Application Process
  • Preventing Asset Seizure
  • Resolving Tax Levies and Liens
  • Negotiating Offer in Compromise
  • Support for Both Business and Personal Taxes
  • Achieving Currently Non-Collectible Status
  • Enforcing Statute of Limitations

See if you qualify with our tax debt calculator here

Who Qualifies For IRS Fresh Start?

Taxpayers can determine their eligibility for the IRS Fresh Start Program by consulting a licensed tax professional. To be considered eligible for the Fresh Start program, you must meet the following criteria:

  • As a sole proprietor, your income has dropped by 25%.

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

  • Your annual income is below $200,000 (married). 

  • You owe less than $50,000 in tax debt.

  • You have a clean history with zero missed delinquent payments to the IRS.

Taxpayers who meet all of the requirements can submit the Fresh Start program application paperwork to the IRS to initiate the tax relief process. The tax professionals at Ideal Tax can provide assistance and ensure that you are on track with all of the application requirements when applying for the IRS Fresh Start Initiative.

Need Assistance with the IRS Fresh Start Program? Call (877) 441-0013

How Can The IRS Fresh Start Program Reduce Your Tax Debt?

In 2023, there are four main tax debt relief programs within the IRS Fresh Start Initiative, each with unique qualification requirements. These are:

  • Installment Agreements
  • Offer in Compromise
  • Currently Non-Collectible Status
  • Penalty Abatements

These pillars of the IRS Fresh Start Program support the goal of relieving delinquent taxpayers from the burden of tax collection strategies used by the Federal Government to punish individuals and small businesses with outstanding tax debts, such as financial penalties and tax liens.

Fresh Start Initiative Payment Options

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.

The two main payment plan options offered within the IRS Fresh Start Program are:

  • Streamlined installment plans
  • Partial payment installment plans.

Streamline Installment Plans

Streamline payment plans are considered long-term, allowing taxpayers to make payments over a period that usually lasts up to 72 or even 84 months.

Partial Payment Installment Plans

Partial payment installment plans involve the taxpayer submitting smaller payments over time.

In both cases, the affordable installments are applied directly to reducing the determined tax debt until payments are fully paid. The other good news is that once you are set up with installment payments under an installment plan, you will no longer receive those nasty IRS collection letters.

  • Over 2 million new installment agreements made: In 2022, there were 2.4 million new installment agreements established allowing an individual or a business to pay their tax liabilities over time.

Who can qualify for a payment plan?

To qualify, taxpayers must owe a tax liability of less than $100,000 in taxes, penalties, and interest for a short-term payment plan or less than $50,000 to qualify for a long-term payment plan. 

Small businesses with less than $25,000 of tax debt can also participate in streamlined installment agreements, which is a much greater balance than the initial $10,000 maximum tax debt threshold. 

What if I can't manage a payment plan?

Offer in Compromise (OIC)

Taxpayers who cannot afford to make monthly payments toward their delinquent tax debt may qualify for an Offer in Compromise (OIC). The 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. Eligibility guidelines for this method of tax debt reduction are stringent and saved for debt cases.

  • Less than half of Offers in Compromise were accepted: In 2022, there were 36,000 offers made to reach a compromise on their tax debt but only 13,000 (36%) of those offers were accepted. An offer in compromise is a proposal by a taxpayer to the federal government that would settle a tax liability for payment of less than the full amount owed.

Tax Lien Withdrawal

The IRS Fresh Start Program makes the process of federal tax lien withdrawal significantly easier for taxpayers who can make a full payment towards their tax debt using a direct debit repayment. 

Other Options of the IRS Fresh Start Program

Currently Not Collectible Status

Currently Not Collectible Status, also known as IRS Hardship Status, essentially lets taxpayers place their payments on hold while in financial hardship. If you can prove that paying your living expenses along with paying your back taxes will cause financial hardship, you may be eligible.

Penalty Abatement

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.

Federal Tax Lien Threshold Changes

The IRS Fresh Start Program has significantly increased the dollar thresholds that would typically trigger the IRS to issue a federal tax lien. These lien thresholds continue to increase with inflation, and with the new changes, taxpayers with unpaid tax debt below the threshold can find a federal tax debt resolution plan without worrying about receiving a lien notice.

Will my Case Get Accepted?

The Fresh Start tax program has historically received a high number of applications, and the economic hardships inflicted on many families during the COVID-19 pandemic amplified this trend, as shown by the record number of applications during 2020.

Many taxpayers still struggle with their delinquent tax returns and financial woes as the pandemic winds down and inflation continues, but now that it is 2023, the trend of lenient guidelines is expected to eventually come to an end. For this reason, individuals experiencing tax problems should reach out to a tax relief company as soon as possible to take advantage of the IRS Fresh Start Program.

Why choose Ideal Tax?

Being in business for more than 13 years, Ideal Tax provides professional guidance to people whose lives have been affected by tax issues. Our team of federally licensed enrolled agents, accountants, and tax attorneys can help evaluate your tax issue and determine if you qualify for IRS Forgiveness Program or the IRS Fresh Start program.

Luis Ceja, Author
Luis Ceja, Author

Luis graduated from California State University Fullerton with a B.A. in Political Science. As the Director of Operations at Ideal Tax, he combines years of tax related knowledge with industry expertise, solidifying his prominence in the field.