How Much Is the IRS Fresh Start Program?

What is the IRS Fresh Start Program?

The IRS understands that not everyone who gets into tax difficulty is a severe and willful criminal, which is why programs like the IRS Fresh Start are available. It is intended as a flexible set of policies to assist non-serial offenders, and it might be the ideal relief alternative if you are eligible.

The Fresh Start Program allows taxpayers who owe past taxes to enter into an arrangement that spreads payment over months but no more than 5-6 years. In addition, the IRS is not legally allowed to cause severe financial hardship. Based on your situation, the IRS can assess the status of your liabilities, assets, income, and expenses to come up with a reasonable solution. For example, you might qualify for an offer in compromise, allowing the IRS to lift a significant part of your tax debt. 

Changes in the Fresh Start Program

Taxpayers may pay back taxes and avoid tax liens more efficiently, thanks to the IRS Fresh Start program. Fresh Start may even be advantageous for taxpayers with small businesses. Simply put, there are three critical aspects of the Fresh Start program:

The Fresh Start program raised the amount debtors might owe before the IRS issues a Notice of Federal Tax Lien. The sum has now increased to $10,000. However, the IRS may still file a lien notice on sums less than $10,000 in some situations, so it’s always advisable to contact a tax professional.

Some taxpayers may be eligible to have their lien notice deleted if they settle their tax bill by using an installment agreement. The Fresh Start initiative increased access to simplified installment arrangements. Individual taxpayers with debt up to $50,000 can make monthly direct debit payments over one to six years.

The IRS also has a mechanism for Compromise Offers. Historically, the Fresh Start Program has been enlarged and simplified, and the IRS now has more leeway when determining a taxpayer’s capacity to pay. A more thorough screening procedure has made the offer program available to a broader range of taxpayers.

Offer in Compromise

An Offer in Compromise, or OIC, from the IRS Fresh Start Program, allows taxpayers to settle their tax liability for less than the entire amount owed. It is the finest type of Fresh Start tax reduction offered by the Fresh Start Initiative.

Although an offer of compromise is the most optimal way to lower your tax obligation through the Fresh Start Program, the requirements are stringent. This option is only available to individuals in challenging financial situations who do not have the financial wherewithal to pay their federal tax bill in full.

Because of the tight requirements for an OIC, not everyone who owes the IRS thousands of dollars will qualify for the program, and it’s generally best to contact a tax professional to explore your options. If you have a certified tax professional on your side, your chances of obtaining an Offer in Compromise increase dramatically because tax experts have a thorough understanding of the IRS Fresh Start Program qualifications and will not be fooled by the IRS to settle for a less-than-optimal resolution.

Extended installment agreement

Applying for an extended installment agreement with the IRS is the first accessible option for people who owe the IRS $50,000 or less. They have six years to clear their loan without further penalties or interest. There will also be no further IRS costs to endure, such as tax liens, wage garnishments, or the possibility of having their assets taken.

Most taxpayers choose this option, where the amount to be paid each month is determined by the taxpayer’s current income and the value of their disposable assets. The IRS sets manageable payment levels to ensure that payments are made on time and without difficulty. The primary reason is that the IRS is not allowed to cause any financial hardship to a debtor, and it’s in the best interest of the IRS to ensure that the debtor can repay the debt. 

When using the extended installment agreement with the IRS, there are two critical factors to take into consideration:

To begin, whether you pay with a debit or credit card, you must pay a processing charge. The price for debit cards is typical $2 to $4 for each payment; the charge for credit cards can be up to 2% of the amount, so use caution when making payments with your card.

Second, if you owe more than $25,000, you must complete your payments using automatic deductions from a bank account (“direct debit”).

Applying for the IRS Fresh Start Program

Without correct documents, the IRS will not accept a request for tax assistance through any Fresh Start Initiative programs. Include as much evidence as humanly possible when submitting a request. It will help to build a strong case. Want to streamline the process? The experts at Ideal Tax can help you with the process.

Furthermore, paperwork is the most nuanced evidence against the strict IRS Fresh Start Program standards. Documentation required includes doctor/medical statements, fire department records, insurance claims, student loan statements, and death certificates of family members. We also recommend attaching a letter with your Form 843 describing your position and why you cannot pay your outstanding tax bill. To complete the additional requirements for tax relief under the Fresh Start Program, you must submit all of your incomplete or unfiled tax returns and your anticipated tax payments.

Finally, all previous six-month filings must be current or accurate. Contacting a competent tax relief organization is the best method to avoid having your request dismissed. Even if you are refused by the IRS, a tax relief firm can assist you in filing an appeal letter.

If you’re confused by all the rules and regulations regarding the fresh start program, it is best to contact one of the tax professionals at They know how IRS processes work and can help you get an agreement with the IRS that is optimal for your situation.