Understanding the Truth About IRS Fresh Start

tax relief options

While the IRS does offer tax relief and resolution options, there’s a lot of misinformation out there about something known as the IRS Fresh Start program. The truth is, this program doesn’t really exist, at least not in such simple terms, and despite the claims of big tax relief firms, this is not a program you apply for.

So what is it? This guide breaks down everything you need to know about common misconceptions about tax relief and the IRS Fresh Start program, alongside legitimate tax relief options you can start pursuing now.

If you’re struggling with tax debt, you are not alone. Tax debt is an extremely common problem in the U.S., with over 18 million taxpayers owing the IRS $316 billion, according to some of the latest numbers. It’s no surprise that the notion of getting a fresh start when it comes to taxes sounds like a big relief. To get help now, contact us at Seattle Legal Services today.

What Is the IRS Fresh Start Program, Really?

Back in 2011, the IRS made changes to its existing tax relief processes and programs. The agency briefly marketed these changes as a “Fresh Start” program, trying to get taxpayers to apply for relief options when they can’t cover their tax bill instead of ignoring their obligations and racking up penalties and interest.

Changes the IRS made that year included increasing the limits of when they would file a tax lien against you, allowing lien withdrawals for certain taxpayers, increasing income limits for offers in compromise, and several others.

It’s important to understand that the IRS Fresh Start program is not a standalone program or a one-size-fits-all relief option. There is no one program you can apply to for tax debt forgiveness. This is a very common misconception, as the Fresh Start language leads taxpayers to believe they can apply to a tax relief program. 

In fact, the Fresh Start program refers to a collection of tax resolution options from the IRS, each with different eligibility requirements and terms. These include installment agreements, offers in compromise, penalty abatement, currently not collectible (CNC) status, and others. More information on those options is below.

Questions and Myths About the Fresh Start Program

You may be searching for the right tax resolution option to get your debt paid off. To fully understand your options, let’s first talk about common myths about the IRS Fresh Start program and what the truth really is.

Is the IRS Fresh Start Program Real?

Unfortunately, there is no IRS Fresh Start program. There isn’t one program that taxpayers can apply for that will forgive their tax debt. The government significantly relies on tax income to operate, so the IRS isn’t going to just forgive tax liabilities all the time. IRS Fresh Start instead refers to a host of programs you may qualify for to pay off your debt over time, get penalties waived, or settle your debt for less because of financial hardship.

Is There a Single Application Process?

Tax resolution companies may market that there’s a special Fresh Start program you can apply for to find relief. This can make it sound like there’s one place to submit an application. However, the IRS offers several different resolution programs, all with their own request or application process.

Does Everyone Qualify for Tax Relief?

The IRS doesn’t grant tax relief to any taxpayer, though most people will likely qualify for a payment plan. Eligibility varies for each program. For example, the IRS will probably not lower your tax liability or put a temporary hold on collections on your account if you can clearly pay your tax bill and have extensive savings and income each month that will more than cover your daily expenses and tax liability. You must show the IRS that you reasonably qualify for the solution you are pursuing.

Is All Tax Debt Forgiven With IRS Fresh Start?

Companies also love to make it sound like your taxes will be completely forgiven with IRS Fresh Start. This is almost never the case. The IRS may allow you to pay your bill over time, settle for less than you owe, or give you a temporary stop on collections. But typically, your complete tax balance is not wiped away.

Is IRS Fresh Start a New Program?

This program is not new. The IRS introduced this language in 2011 to represent their collection of tax relief options that continue.

Is IRS Fresh Start a Limited-Time Offer?

Watch out for language that you have to apply to Fresh Start now or miss out on tax relief. The fact is, IRS tax relief is ongoing and continues each year. It is not a special limited-time offer that you need to apply to immediately or stay deep in tax debt. That said, however, you should attempt to take care of your tax debt as soon as possible so that you don’t have to worry about wage garnishments, asset seizures, losing your passport, or other consequences.

How to Avoid Tax Resolution Companies with Misleading Language 

The IRS Fresh Start program language continues mostly because of tax resolution companies trying to get your business or even scammers trying to trick you. Watch out for this kind of language when you’re seeking tax assistance:

  • IRS Fresh Start is a one-time offer, so you need to act fast
  • IRS Fresh Start will forgive all of your tax debt
  • Anyone can apply to IRS Fresh Start with tax debt
  • Only our company can give you access to IRS Fresh Start

If you see language like this, it probably means the company or tax service provider is just trying to lure you. Sometimes, they may then help you apply for IRS relief options, but sometimes they are being deceptive to trick you into paying for something false. 

Legitimate tax resolution specialists including tax attorneys, enrolled agents, and CPAs don’t need to use this type of misleading or aggressive language to “trick you” into using their services. Instead, they provide quality help and guidance to their clients, and then, they rely on their skills, reputation, and honest marketing to draw in clients. 

Be wary of who you decide to partner with for tax services. You want to get your issue resolved in the best way that works for your situation. Seek reputable, trustworthy tax help with the team at Seattle Legal Services.

Real Tax Resolution Options from the IRS

So, now that you know what false advertising looks like, what are your actual tax relief options? Here is a breakdown of programs you may qualify for:

Installment Agreements

If you simply need more time to pay off your tax balance, you can apply for a payment plan, or installment agreement. These plans give you a set period of time, usually a few years, where you pay a set monthly amount until your taxes are paid off. You can apply online for a long-term payment plan online if you owe $50,000, but if you owe more, you will need to apply over the phone, through the mail, or with the help of a tax pro. 

Offer in Compromise

Another option is an offer in compromise. Say you can’t afford your tax balance, and you won’t be able to anytime soon because of your income and financial situation. You can send the IRS an offer in compromise, which essentially asks them to accept a lower amount to settle up your debt. They will accept your offer if:

  • There is doubt as to your tax liability, when there is a genuine dispute to the tax debt.
  • There is doubt as to collectability, where your assets are less than the tax liability.
  • Requiring full payment would create economic hardship or would be “unfair and inequitable because of exceptional circumstances”.

Penalty Abatement

You may qualify for IRS penalty abatement. One form is first-time penalty abatement, when the IRS agrees to reduce or remove your penalty because you have had otherwise good tax compliance history in the last three years. You may also get penalties waived if you can show the IRS that you are dealing with a financial hardship or the IRS’s advice led you to make a mistake that caused the penalty.

Innocent Spouse Relief

If you’re married and file jointly, you may be able to get innocent spouse relief. This applies if your spouse underreported income or made another mistake on your joint return that you weren’t aware of. If granted, innocent spouse relief will ensure you’re not liable for additional taxes in that case.

Currently Not Collectible Status

CNC status is when the IRS temporarily halts collections on your account. If you can show the IRS that you’re going through financial troubles, they may agree to put your account in CNC status. However, much of the time, you’ll have to pay what you owe once your situation improves, unless your status lasts longer than the statute of limitations for collection (10 years).

IRS Lien Withdrawal

You may also be able to have a federal tax lien withdrawn after the IRS has filed it. By setting up a payment plan that requires a lien withdrawal, you may be able to successfully get the IRS to remove the public Notice of Tax Lien from public records. In some cases, you may be able to get the lien discharged from a specific asset. Another potential option, lien subordination is when you ensure your other lenders’ liens have priority over the IRS. That often comes into play if you need to take a loan against an asset so that you can pay off your tax bill.

How to Recognize Reputable Tax Relief Services

Even if you understand the IRS’s options for tax resolution, you still may need assistance from a tax expert. With all the misinformation out there, how do you recognize reputable services? Here are a few tips to identify legitimate tax relief providers:

  • Look for credentials and certifications: Providers who are Certified Public Accountants (CPAs) or tax attorneys have the background, experience, education, or certification to prove that they’re legitimate. Look for these credentials when searching.
  • Watch out for misleading Fresh Start language: Remember that Fresh Start is language the IRS promoted years ago. If companies are still using this verbiage, make sure they’re properly representing the IRS’s tax relief options.
  • Conduct research: It’s hard to know when a company is legitimate today when everything is online. However, read online reviews on legitimate platforms, such as Yelp and Google, and read the firm’s website and online content. Look for them on social sites to view additional reviews and testimonials.
  • Don’t fall for false promises: If any company is “guaranteeing” that your debt can be wiped out, be very wary unless you’ve had a detailed conversation about your finances. Most of the time, no promises can be made that the IRS can agree to, until the tax pro has details about your tax situation. A legitimate company will first want to talk to you about your circumstances to guide you forward.
  • Ask the right questions: When you do talk to a provider, ask plenty of questions about their services. Have they helped clients similar to you? What are the most likely outcomes of your situation? How have past clients seen success? How long have they been in business?

Working with experienced CPAs and attorneys is your best bet to avoid deceptive practices. Work with a seasoned, vetted tax expert to be sure you’re not being misled.

Talk to the Reputable Team at Seattle Legal Services

Unfortunately, much of the overly optimistic language you see about the IRS Fresh Start program is deceptive. This “program” really just represents the tax resolution options you may qualify for, including installment agreements, settlement offers, temporary collection delays, and penalty abatement. These realistic options may help you pay off your tax debt and find the relief you’re looking for.

Always work with experienced, reputable tax professionals who can give you personalized advice and break down tax law for you. The team at Seattle Legal Services has extensive experience working through complex tax issues. Our tax lawyer can provide a range of tax resolution options based on the problem you’re dealing with.

Set up a consultation with Seattle Legal Services today to get started.