Corporate Lakes
6842 W. 121st Court
Overland Park, KS 66209

Friday, Oct. 23rd 2015

Tax Debt Resolution-IRS Fresh Start Program Helps Taxpayers Who Owe the IRS

IRS Fresh Start Program Helps Taxpayers Who Owe the IRS

The IRS Fresh Start program makes it easier for taxpayers to pay back taxes and avoid tax liens. Even small business taxpayers may benefit from Fresh Start. Here are three important features of the Fresh Start program:


  • Tax Liens.  The Fresh Start program increased the amount that taxpayers can owe before the IRS generally will file a Notice of Federal Tax Lien. That amount is now $10,000. When a taxpayer meets certain requirements and pays off their tax debt, the IRS may now withdraw a filed Notice of Federal Tax Lien. Taxpayers must request this in writing using Form 12277, Application for Withdrawal. It is important to understand the difference in having a tax lien “withdrawn” as opposed to a the lien being “released.”  A tax lien that has been “withdrawn” should not appear on your credit history, as if it were never issued.  A tax lien that is merely “released” results in your credit history showing that it was issued but released.  A tax lien that is released is similar to a bankruptcy in that after your bankruptcy case is over and the debts are discharged, the occurrence of the bankruptcy appears on your credit history but shows that you are no longer in bankruptcy. 
  • Payment Plans. The Fresh Start program expanded access to streamlined installment agreements. Now, individual taxpayers who owe up to $50,000 can pay through monthly direct debit payments for up to 72 months (six years). While the IRS generally will not need a financial statement, they may need some financial information from the taxpayer. Taxpayers in need of installment agreements for tax debts more than $50,000 or longer than six years still need to provide the IRS with a financial statement.



  • Offers in Compromise.  An Offer in Compromise is an agreement that allows taxpayers to settle their tax debt for less than the full amount. Fresh Start expanded and streamlined the OIC program. The IRS now has more flexibility when analyzing a taxpayer’s ability to pay. This makes the offer program available to a larger group of taxpayers.

    Generally, the IRS will accept an offer if it represents the most the agency can expect to collect within a reasonable period of time. The IRS will not accept an offer if it believes that the taxpayer can pay the amount owed in full as a lump sum or through a payment agreement. The IRS looks at several factors, including the taxpayer’s income and assets, to make a decision regarding the taxpayer’s ability to pay.

Blog by: Troy Renkemeyer

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