How to Apply for IRS Fresh Start Program
I receive so many calls from taxpayers and San Francisco small business owners who are overwhelmed with tax debt. If that’s you, know that you’re not alone. Luckily, the Internal Revenue Service (IRS) has a program that may help individuals with tax burdens. The IRS Fresh Start Program provides options for taxpayers to catch up on their financial obligations without overwhelming penalties or interest rates, making it a lifeline for those facing significant tax debt. Let’s look at the 2024 IRS Fresh Start Program requirements and how you can apply.
The Fresh Start program began in 2011 and 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.
Before you apply for the Fresh Start Program, it’s important to know if you actually qualify for its benefits. Here are some general eligibility requirements:
- 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
If you determine that you do, in fact, qualify, here is how to apply for the IRS Fresh Start Program.
1. Assess Your Tax Situation — Take stock of your financial situation, tax debt and current income level. This will help you determine which of the Fresh Start options best fits your needs: OIC, installment agreements or tax lien withdrawal.
2. Gather Necessary Documentation — You’ll need several pieces of documentation for the Fresh Start Program application, including personal and financial information. This may include income statements, bank records and other financial documents. You also want copies of your tax return and monthly income and expenses.
3. Choose Your Fresh Start Option and Submit Application — The application steps vary based on the program option you choose. If you choose an OIC, you’ll submit Form 656, along with Form 433-A (individuals) or Form 433-B (businesses).
4. Submit Fees — Some Fresh Start options (like the OIC) require a non-refundable application fee, which you can pay online or by mail. If you meet low-income criteria, you may qualify for a waiver.
5. Follow Up on Your Application — The IRS can take several weeks to several months to review applications, depending on the Fresh Start option. Be prepared for them to request additional information, especially if you are applying for an OIC. Respond promptly to any requests, as delayed responses can extend processing times.
6. Maintain Compliance After Approval — Once you receive approval for the Fresh Start Program, you must remain compliant with your current tax filings and payments. Missing a single installment, late filing or unpaid estimated tax payment could void the agreement, and the IRS could reinstate full penalties.
The IRS Fresh Start Program is a great way for individual taxpayers and San Francisco small businesses owners 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 LLP. It doesn’t matter the issue: audits, collections, appeals, international disclosures, grumpy people— Allison enjoys fixing problems. In addition to her legal work, she has worked in accounting and utilizes that knowledge to her advantage while handling cases involving EDD audits from San Francisco to San Diego.
