How To Be Eligible For The IRS Fresh Start Program

It’s not uncommon to struggle with paying your federal taxes. I hear from individuals who, through no fault of their own, just cannot pay the IRS when taxes come due. Luckily, the IRS has a special program to help. The IRS Fresh Start program is for individual taxpayers and small businesses that need help paying off their tax debt.

The Fresh Start program began in 2011, and more recently has expanded to help more taxpayers by offering more flexible Offer-in-Compromise (OIC) terms. An OIC is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Generally, the IRS will not entertain an OIC if they believe the taxpayer can pay what they owe through a payment agreement or installment plan. 

To be eligible for the Fresh Start Program, you must meet one of the following criteria:

  • You’re self-employed and had a drop in income of at least 25%
  • You’re single and have an income of less than $100,000
  • You’re married and have an income of less than $200,000
  • Your tax debt balance is less than $50,000

Under the new terms of the Fresh Start Program, the OIC will be more readily available to taxpayers who may be struggling to pay their bills. Additionally, the changes may help taxpayers resolve their debt in as little as two years compared to upwards of five years in the past. According to the IRS, here is how the program is changing:

  • Revising the calculation for the taxpayer’s future income
  • Allowing taxpayers to repay their student loans
  • Allowing taxpayers to pay state and local delinquent taxes
  • Expanding the Allowable Living Expense allowance category and amount
  • Equity in income producing assets generally will not be included in the calculation of reasonable collection potential for on-going businesses 

Under the new program, when the IRS calculates a taxpayer’s reasonable collection potential, it will now look at only one year of future income (down from four years) for offers paid in five or fewer months, and two years of future income (down from five years) for offers paid in six to 24 months. All offers must be fully paid within 24 months of the date the offer is accepted. 

The IRS Fresh Start Program is a great way for individual taxpayers and small businesses owners in San Francisco who feel they cannot pay their tax debt. And there is no penalty to apply for assistance under the program. If you are unsure if you qualify, or have doubts about how it works, it’s best to consult a San Francisco tax professional or tax attorney with experience working with the IRS.

Allison Soares is a partner and tax attorney at Vanst Law. Before starting her own practice, Soares was a partner at a tax law firm where she honed her skills handling a wide variety of tax and employment-related cases. In addition to her legal work, she has worked in accounting and utilizes that knowledge to her advantage while handling cases involving EDD audits.

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Allison Soares

Allison Soares, a renowned tax attorney, excels in representing clients before the IRS, FTB, EDD, and CDTFA. With a Bachelor of Arts in Finance from the University of Wisconsin, Milwaukee, and a transformative teaching stint in Brazil, Allison’s diverse background enriches her legal expertise. She pursued law at St. Thomas University School of Law, Miami, complementing it with an MBA in accounting and forensic accounting. Further honing her skills, she obtained a Master of Laws in Taxation from the University of San Diego School of Law. As an adjunct professor at San Diego State University, Allison imparts her knowledge in tax procedures, practice, and ethics. Her accolades include being named Best of the Bar by the San Diego Business Journal and multiple Super Lawyer recognitions. Committed to community service, she volunteers with Forever Balboa Park and Friends of Balboa Park. Allison’s authoritative contributions in tax law are showcased through her publications and speaking engagements.

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