Start Over with the IRS

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Start Over with the IRS

Taxpayers who are unable to pay their Internal Revenue Service (IRS) debts are in a tough situation. Some filers who legitimately believe they do not owe the amount of tax imposed to them might seek relief from the IRS’s Taxpayer Advocate Service or the Appeals division. Some difficult situations can only be settled in tax court to the taxpayer’s satisfaction. Those who actually owe past taxes to the IRS, on the other hand, will suffer interest, penalties, and ultimately liens and levies on their state tax refunds, income, and property.

More information may be found at: What Happens If You Can’t Pay Your Taxes?

With tax debt, it is more difficult to secure or retain a job, or to receive affordable credit of any type. Many tax professionals and consumer activists have accused the IRS of ignoring people attempting to pay their taxes. The IRS announced the development of a new project called as the Fresh Start program in 2011, in part to assist people who had been adversely struck by the recession. This program was created to allow individuals who owing significant past taxes to combine their tax bills and pay them off in a simple and orderly manner.

What Does the Fresh Start Program Do?

The Fresh Start initiative includes numerous features aimed at streamlining the collection process and making it simpler for a greater number of taxpayers to establish payment arrangements for overdue taxes. The following are the primary provisions of this program:

Threshold Raising the tax lien dollar threshold to $10,000.

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Simplification Simplifying and expediting the procedure for removing liens and levies when taxes have been paid (this was formerly a very slow and cumbersome process).Taxpayers may now request that these be deleted within 30 days after their unpaid tax debt has been paid. Both this and the preceding clause were intended to reduce the significant negative influence that tax liens may have on a taxpayer’s credit report since, when a lien was withdrawn, it was virtually erased from the taxpayer’s credit history. However, in April 2018, all three credit agencies, Experian, TransUnion, and Equifax, erased all tax liens off credit reports. To request the IRS to remove a lien, taxpayers must complete and submit IRS Form 12277.

InstallmentsA Direct Debit Installment Agreement is established, which withdraws a set sum from the taxpayer’s account on a regular basis. This program is available in combination with the two preceding clauses. The IRS will release the tax lien even before the debt is paid in full if the person has made multiple timely payments. Taxpayers who make installment payments and switch to the direct debit scheme will have their liens released immediately upon request. (If a taxpayer has his or her lien removed upon request and subsequently defaults on this arrangement, the IRS will promptly file a new lien.)

Small Enterprises Increasing the cost threshold for small company installment arrangements. Small firms that owing more than $10,000 could not previously put up an installment plan. The initiative increases this sum to $25,000 and enables companies to pay off their tax burden over the course of two years.

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No Way to Pay The cash barrier for individuals wishing to register an offer in compromise has been raised from $25,000 to $50,000. This is a significant concession for taxpayers who are unable to pay their past taxes.

The Fresh Start program’s ultimate goal is to relieve the burden on responsible taxpayers who are taking proactive actions to pay off their tax obligation. The monetary threshold increases in the preceding clauses are simply an inflationary adjustment that has been long overdue. Furthermore, lien withdrawals are only accessible to people and corporations that owe income taxes, and the program is only intended for use with income taxes. Those who owe back taxes on gifts, estates, or employment cannot benefit from the scheme.


Thousands of delinquent taxpayers who are trying to make up on their tax arrears will benefit significantly from the Fresh Start initiative. The removal of tax liens under the conditions of this program may assist many filers in maintaining or obtaining employment that will enable them to pay off their bills in full. Visit the IRS Fresh Start program website for additional information.

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