A lot of people would love to use a reset button on their financial situation if they could. The United States currently has tax debt worth about $527 billion. Thankfully, the Internal Revenue Service (IRS) recognizes that a lot of people are financially struggling, which is why they established the Fresh Start Program. This program can support those who need debt support. Let us take a look at how this free debt relief option might be able to help you out.

The Fresh Start Program: What is it?

A lot of individuals think the Fresh Start Program is one type of debt relief option. It is actually a general label that explains different IRS debt relief options. This program focuses on offering support to taxpayers that need help in managing their debt and any punishments they might face. There are many different ways to deal with debt, which is why there is no one-size-fits-all solution for everyone to manage their debt. The Fresh Start Program was created in 2011 because the IRS wanted to support taxpayers to reach good financial standing through debt relief options. This program allows people that are struggling with their taxes to manage their tax debt without any punishments involved. Punishments could include:

• Wage Garnishments
• Liens and Levies
• Time in prison

As we mentioned before, the most suitable option to help with your finances can differ. This is why you should consider reaching out to a tax expert so that you can figure out what works for you. Debt relief opportunities under this program include:

• Currently Non-Collectible (CNC)
• Installment Agreement (IA)
• Offer in Compromise (OIC)
• Penalty Abatement

Currently Non-Collectible (CNC)

In an attempt to solve their financial problems, some people avoid the IRS altogether. This is not the right choice to make. The right option, instead, could be a CNC status. If you owe a lot of money to the IRS and you cannot afford to pay it off, then you should consider the CNC tax program. The CNC program prevents your tax debt from being collected.

Not anyone can qualify for the CNC program, only people that the IRS and State are aware of will be eligible. How can the IRS and State be aware of someone? Only when a taxpayer’s income per month before taxes is lower than their allowable costs in accordance with nationwide standards. If you reach this limit, your financial history will show that you cannot afford to pay back your debt without struggling financially. This is why the program puts a stop to collecting your debt.

How Can You Benefit From the CNC Program?

Many advantages come with this support option. The greatest thing is that taxpayers can receive support with their tax bill. Taxpayers that take part in the CNC program will not have to concern themselves with debt collections. Other than that advantage, another advantage is that the IRS and other state taxing authorities will prevent your assets from being seized, bank levies, and wage garnishment.

In addition, an advantage of this program is that you might not need to repay your debt once you participate in the CNC program. This is because the statute of limitations on your debt will keep going, while you’re in CNC status. People know it as the IRS Expiration of Statutes (CSED)– your debt might not be collectable if your debt reaches the 10-year statute on your back taxes.

What You Should Know About the CNC Program

While this program may help you, it’s important to be aware of certain things. One of the most important things to keep in mind is that the program only accepts a small group of taxpayers who apply. Because of this, applying could take a while and be more in-depth.

Another thing to consider is that under the CNC program, there is a chance you might not need to repay your debt, however, it is not guaranteed. You might still need to pay off a part or all of your debt.

The IRS will be following up with people that have a CNC status through regular financial reports. This allows the IRS to figure out whether your finances can help you make full payments or payments that are partial. If you do not follow through with the IRS’s demands for documents, you might be kicked out of the program.

Installment Agreement (IA)

Some people still have debt by the end of the year and they cannot afford to pay for it. If they cannot manage to repay this money, then they might go through punishments, fees, and even get arrested. This is where the IRS IA plays a factor. Often, the IRS and state taxing agencies can offer installment plans and payment plans to taxpayers. This allows taxpayers the opportunity for more time to pay off their debt.

How Can You Qualify for the Installment Agreement?

People that cannot repay their debt could gain a lot from this opportunity in the case that they:

• Stay up to date on their filed tax returns
• Offer disclosure on their assets and cash
• Show evidence that they cannot repay the amount they owe and they cannot borrow the money they owe either

Applying for an IRS Installment Agreement

Generally, you should start working on the application process as soon as you can. This is because if you need to repay money to the IRS, you should be as quick about it as possible. This will lower the chances of facing punishments and other negative impacts that come with repaying these tax debts.

If you consider starting the application process, then you should look for help from a tax expert, such as an accountant.

Offer in Compromise (OIC)

The OIC program can offer support to taxpayers that are interested in settling their delinquent taxes for a lower amount than they are actually indebted. If you are interested in decreasing your debt amount, then this could be a suitable method to do it. You should keep in mind that not anyone can take part in this program– and don’t forget about the application process. Whether you qualify or not, you need to be mindful that less than 50% of applicants are accepted into the program each year.

What You Should Know About the OIC Program

A tax professional can be useful when filling out the OIC application. They offer people the guidance and support required to ensure that an application is accepted by the IRS. If you want to take advantage of this program, then you must have been 100% compliant with all of your previous tax returns. The IRS generally reviews six years of your old tax returns.

You must submit your application once you have completed it. Following the submission of your application, the IRS will examine your current financial situation to determine your ability to repay your tax debt. You may be asked for additional information that you must provide.

What Happens if Your OIC Application is Denied?

If the program refuses your application, you can present an appeal. You can only present your appeal 30 days after receiving your rejection letter. So make sure to be on the lookout for the mail!

Penalty Abatement

The IRS is well-known for its penalties. Penalties will be delivered to taxpayers automatically via their computer system. Penalties can add up faster than you think causing an increase in already high tax debt. If you are facing IRS penalties, you may be eligible for penalty abatement. Applying can be difficult, which is why you should consider the advice of a tax expert. Professional assistance is especially important because the penalty abatement application will involve IRS language, codes, and procedures that taxpayers may not understand.

The Importance of Reasonable Cause

When facing these penalties, you should offer evidence of reasonable cause that results in not being able to manage tax debt effectively. Some popular situations of reasonable cause include:

• Natural Disasters
• Types of Disturbances
• Fires
• Unable to Obtain Financial Records
• The passing away of a taxpayer’s immediate household member
• Serious medical condition of the taxpayer and the taxpayer’s immediate household member

No matter what the reasonable cause is that results in mishandling your tax debt, you will need to present documents as evidence!

What are the Requirements for the IRS Fresh Start Program?

Now that you are aware of the various relief options available through the IRS Fresh Start Program, it is critical that you understand your eligibility. Each opportunity caters to a different demographic. As a result, you should be able to find one that can assist you. That is why you should consult with a tax professional to better understand the best option for you.

However, one of the most significant challenges that people face is receiving assistance from these programs while dealing with their current tax returns. This is because the IRS requires taxpayers to be up to date on all tax returns to qualify for the IRS Fresh Start program.

Aside from being current, taxpayers must also have the appropriate amount of withholdings for the current year. The IRS imposes these requirements to create trust with taxpayers and hold them accountable. This program’s basic qualifications include:

• Single filers cannot earn more than $100,000 per year, and joint filers cannot earn more than $200,000 per year.
• Self-employed individuals must show proof of a 25% decrease in net income.
• A person’s tax balance must be less than $50,000 by the end of the year.

If you want to apply for this program, you must first obtain the appropriate eligibility form. Each relief option available through the Fresh Start program will have its own set of forms. When filling out forms, make sure they are accurate and detailed. You can also benefit from the assistance of a tax professional with the application process!

In Conclusion

If you are struggling to pay your tax debt, you will find a lot of benefits from the Fresh Start Program. There is a wide range of debt assistance options from this program, such as:

• Currently Non-Collectible (CNC)
• Installment Agreement (IA)
• Offer in Compromise (OIC)
• Penalty Abatement

If you are interested in looking for the best relief opportunity for your finances, you should ask a tax expert. These experts can offer guidance on helping you find the best relief opportunity for what you are going through. You should work on the process as soon as possible. This could help you prevent any negative effects when going through your taxes, and make handling your tax debt a breeze.