In 2011, the IRS announced the expansion of its “Start New” program in an effort to help taxpayers experiencing financial difficulties. But the problem we have is that, similar to all other IRS announcements, this one also claims that they are always on your side. But they don’t and in fact, they don’t have to be.
Let’s find out which of the three main IRS Fresh Start programs is actually the most helpful for solving your tax problems.
1. IRS New Beginning for Tax Liens
The first is the IRS New Start Federal Tax Lien program. The IRS claims that the new standard for Federal Tax Lien filings benefits taxpayers because it has increased the minimum obligation to file a tax lien from $5,000 to $10,000; this sounds good. But it’s pretty useless. And what can the IRS do to keep people safe when they have nothing to pay for? This will only increase your credit score by 100 points or more and make it difficult to get new credit approvals to repay the IRS. New changes are not retroactive and the IRS cannot automatically withdraw a previously filed lien. Rating: Two thumbs down; very ineffective program.
2. Installment Agreement and Fresh Start Program
The next program is the IRS installment payment program. If you owe $50,000 or less in combined taxes, interest, and penalties, you can participate in an installment plan by providing the IRS with minimal financial information (if you owe less than $25,000, you don’t need to send anything). The payment deadline under the simplified installment agreement has been increased to 72 months. Rating: Very nice.
If you owe more than $50,000, you must complete Form 433-F, Statement of Collection Information. You will have to negotiate a lot with the IRS regarding a reasonable monthly plan as the amount of payment is at the discretion of the IRS representative.
3. New Initial Offer in Compromise
It definitely stands out as the best IRS Fresh Start program to pay off taxes on less than you owe. The IRS has now added more flexibility when calculating a taxpayer’s ability to pay when seeking relief under the Offer in Compromise. One of the significant changes is in the calculation of potential fair levies for taxpayers. The IRS sees only two years of future earnings for offers paid within 24 months, which is a reduction from five years. The changes allow more individuals to qualify for the OKI program, giving them a new opportunity to settle their tax debt with the IRS. Rating: An excellent program. Go and take full advantage of this opportunity.
Dealing with the IRS
The IRS New Beginning Program has opened the door to new possibilities for solving the counter-tax problem, but it must be used the right way. You should understand that knowing all the details relating to the new Installment Agreement policies or accepting the IRS Offer in Compromise remains a challenge for many. There’s no guarantee that a new relaxed policy will last forever, so there’s no better time than now to start negotiating with the IRS.