Are you stressing out over your finances? Is it getting too overwhelming for you at times? That is completely understandable and we might have a way to help you out. You probably heard of the Internal Revenue Service (IRS), especially since they are in charge of your taxes. We’re reminding you of this federal agency because they provide the Fresh Start Program. What is the Fresh Start Program? Good question, which is what this article is about!
Understanding The Fresh Start Program
Did you know that the United States has hundreds of billions worth of tax debt? That’s a lot of money. This is where the Fresh Start Program comes in handy since it offers debt relief. The Fresh Start Program was launched in 2011 to help people deal with their tax debt without getting any penalties. These penalties include wage garnishments, liens, levies, and prison time. However, each person has their own debt situation, which is why the Fresh Start Program offers different relief opportunities. Some of these options are Offer in Compromise (OIC), Currently Non-Collectible (CNC), Installment Agreement (IA), and Penalty Abatement. We’re going to explain each debt relief opportunity and tell you what you need to know about them.
Qualifying and Applying For The Fresh Start Program
The Fresh Start Program offers different relief opportunities. However, you should know that a big issue that most people face is managing their current tax returns. Tax returns are important when it comes to qualification requirements for the Fresh Start Program. If you want to know more about which opportunity is better suited for you, then a professional can help you. Furthermore, when you know what opportunity is best for you, you can fill out the right eligibility form. Make sure to stay honest and accurate with as many details as possible in your application.
Offer in Compromise (OIC)
The Offer in Compromise program comes from the IRS, which annually accepts only less than half of its applicants. You will need to stay up to date with all of your old tax returns. This is a no-exception rule since the IRS normally looks at your last six years. The application process might be difficult to understand, so talking to a professional might help you out. They can also help you get a better chance of IRS approval. If you are unfortunate enough to not get approval, then you can submit an appeal within 30 days of your rejection letter. This program offers debt relief to taxpayers that want to pay their outstanding debt for less than the debt amount.
Installment Agreement (IA)
To qualify for this opportunity, you need to show that you cannot repay your entire debt amount and be up-to-date on your tax returns. Furthermore, you need to provide evidence that you don’t have the means to pay off or get the debt amount and show proof of your cash/assets. This debt relief opportunity helps people repay their debt in reasonable installments, giving them more time to pay off their debt. You should apply as soon as you can to avoid penalties or other negative impacts.
Currently Non-Collectible (CNC)
Did you know that the CNC tax program offers a way to stop your debt collection? If you want to qualify for this type of debt relief opportunity, then you should have the following apply:
- Show that you cannot repay your debt without financially struggling
- The IRS and the State need to recognize your situation
- Earn a monthly amount that is less than the allowable expenses, according to the national standards
With the above requirements in mind, there are only specific people that can get benefits from this program. If you do not follow the IRS’s documentation request, then you might not keep getting CNC benefits. The best thing about this program is that you might not need to repay your debt when you participate in this program, all while the statute of limitations continues. After the 10-year statute, your debt might not be collective anymore. However, this does not apply to everyone. There is still a possibility that you will need to repay some or all of your debt amount. Another benefit is that it allows you to find relief when it comes to debt collection without facing penalties.
You should consider that the IRS accepts only some of the applicants, which is why the application process can take a while. Furthermore, the IRS will keep track of your CNC status to find out whether or not you can repay all or some of your debt amount. The IRS does this through regular financial reviews of the CNC recipients.
An issue that most people worry about when it comes to tax debt is the penalties that come with it. Penalty abatement might be a great option for you to consider if you are facing IRS penalties. With these penalties, you should prove why you cannot properly deal with your tax debt and have the documents to back it up. This is better known as “reasonable cause.” Some of these causes would be disturbances, natural disasters, inability to obtain records, serious medical conditions, or death of the taxpayer or immediate family. While you are going through the application, you should contact a tax expert. A tax professional can help you when it comes to the application process since it has a lot of IRS terms.
Tax debt can be really tiresome. Many people choose to avoid it, thinking that it would go away on its own. However, there are better options than sweeping it under the rug! You can consider looking to the IRS for help. The Fresh Start Program is one way to help with your tax debt. However, the Fresh Start Program contains multiple debt relief options. These debt relief options can help different groups of people, based on their current tax debt situation. You have nothing to lose when you explore your options and do some research! Your tax situation might get better when you do!