Hundreds of thousands of people are indebted to the IRS because they do not have the money to pay their taxes. In the past, a debt of $5000 could easily turn into a lien, but nowadays the IRS is considerably less belligerent than it used to be. Why? Because it offers a Fresh Start Initiative. This is an umbrella-term for a few tax relief programs meant to help those that cannot pay their debt in full or those who cannot pay it at a certain time because they would remain poor and miserable.
The fresh start initiative is a fantastic way of reasoning with the IRS and asking for IRS debt forgiveness or any other fresh start program.
The IRS Debt Relief Programs Within the Fresh Start Initiative
All of these debt relief mechanisms have been designed with the objective to help delinquent payers. In other words, the IRS understands that sometimes it’s beyond the taxpayer’s control to be up-to-date with the payment due to unforeseen circumstances. The Fresh Start Initiative incorporates two specific programs that one could use in straightening his faulty situation when it comes to paying taxes. These are:
The Offer in Compromise
This “compromise” has been available to the large public since 1998. It is, by excellence, an IRS debt forgiveness tool, because it enables the delinquent taxpayer to pay the IRS just a fraction of the total amount of their debt, sometimes as less as a quarter of it. As for the application, you must fill in two forms: form 433A and Form 656. A lot of money is involved in an offer in compromise, so you’ll need to provide evidence that you are unable to pay your debt.
The Installment Agreement
An installment agreement, if accepted by the IRS, allows you to make monthly payments on your debt instead of having the agency collecting the full sum and leaving you penniless. Simply put, it’s like you’d pay a rate on something on a monthly basis. You can get such an installment for a debt of maximum $50.000, payable in 72 months. Of course, the monthly fee is codependent on the total sum of your debt to the IRS. In order to apply for an installment agreement, you will have to fill in the Form 9465, but it depends on whether you are an employer or an employee, as the application routes differ from one another.
How Do these IRS Debt Relief Programs Help Me?
In addition to the fact that you will manage to pay less than you owe or to pay your debt with monthly fees, you won’t be liable for having the IRS bring its artillery on you. Any of the above agreements from the Fresh Start Initiative will help you avoid property and bank account liens, wage garnishments, and penalties (in interest + fines).
Penalties can get as high as 40% of your debt, and this can be catastrophic, especially when you couldn’t afford to pay your debt as it was in the first place.
How Do I Qualify for a Fresh Start Initiative?
There are no well-established requirements set for these IRS debt forgiveness programs. Each of the two comes with its own demands. With all these, there are some general requests you should meet if you consider applying for a fresh start program.
First of all, you must prove that you’re in an economic situation in which your hands are tied, so you cannot pay your debt. This will lead to thorough investigations from the IRS because they must make sure you’re not lying.
Second of all, you should always file your tax returns. You’re compelled to do that by law, even when you cannot afford to pay those taxes.
Third, you must make the deposits for the federal taxes if you’re an employer and finally, you mustn’t be in the process of declaring bankruptcy.
Can I Do It All By Myself?
You can get in one of the IRS debt relief programs from the Fresh Start Initiative on your own, sure, but it’s not recommended to do so. The IRS is a complex jungle for an outsider, that’s why getting a tax relief attorney/professional can guide you through the process and also tell you which fresh start program is the best for you.
Pay attention, however, when you decide to hire an attorney. Some tax relief companies will charge absurd amounts of money for little to no actual help. Before you choose, try to consult with someone that is versed in this field and can recommend you a reliable attorney.
The Fresh Start Initiative is indeed a fantastic opportunity, so you wouldn’t want to sabotage it by getting bad advice or doing things yourself thinking you have all the necessary expertise.