IRS Fresh Start Program – Fresh Start Tax LLC - 1-866-700-1040
IRS has made some major changes in the way it deals with taxpayer debt, penalty relief, and Installment Agreements.
The Program that deals with the new changes is called the Fresh Start Initiative .
Our firm is called Fresh Start Tax LLC. We can help explain the new guidelines to all taxpayers and how it can effect their individual situation. 1-866-700-1040.
The main areas of change fall into 3 categories:
1. The Offer in Compromise or the Tax Debt Settlement,
2. Penalty Tax Relief,
3. Installment Agreements.
The “Fresh Start” initiative to help struggling taxpayers by taking steps to provide new penalty relief to the unemployed and making Installment Agreements available to more people.
Under the new Fresh Start provisions is a part of a broader effort started at the IRS in 2008, certain taxpayers who have been unemployed for 30 days or longer will be able to avoid failure-to-pay penalties.
The IRS is doubling the dollar threshold for taxpayers eligible for Installment Agreements to help more people qualify for the program.
IRS Penalty Relief
The new penalty relief for the unemployed on failure-to-pay penalties, which are one of the biggest factors a financially distressed taxpayer faces on a tax bill.
To assist those most in need a six-month grace period on failure-to-pay penalties will be made available to certain wage earners and self-employed individuals.
The request for an extension of time to pay will result in relief from the failure to pay penalty for tax year 2011 only if the tax, interest and any other penalties are fully paid by Oct. 15, 2012.
The penalty relief will be available to two categories of taxpayers:
1. Wage earners who have been unemployed at least 30 consecutive days during 2011 or in 2012 up to the April 17 deadline for filing a federal tax return this year.
2. Self-employed individuals who experienced a 25 percent or greater reduction in business income in 2011 due to the economy.
This IRS penalty relief is subject to income limits.
A taxpayers income must not exceed $200,000 if he or she files as married filing jointly or not exceed $100,000 if he or she files as single or head of household.
This penalty relief is also restricted to taxpayers whose calendar year 2011 balance due does not exceed $50,000.
Taxpayers meeting the eligibility criteria will need to complete a new Form 1127A to seek the 2011 penalty relief.
The Failure To Pay Penalty.
The failure to Pay Penalty is generally half of 1 percent per month with an upper limit of 25 percent.
Under this new relief, taxpayers can avoid that penalty until Oct. 15, 2012, which is six months beyond this year’s filing deadline. However, the IRS is still legally required to charge interest on unpaid back taxes and does not have the authority to waive this charge, which is currently 3 percent on an annual basis.
Even with the new penalty relief becoming available the IRS strongly encourages taxpayers to file their returns on time by April 17 or file for an extension.
Failure-to-file penalties applied to unpaid taxes remain in effect and are generally 5 percent per month, also with a 25 percent cap.
Installment Agreements from the IRS
The Fresh Start provisions also mean that more taxpayers will have the ability to use streamlined installment agreements to catch up on back taxes.
Effective immediately, the threshold for using an installment agreement without having to supply the IRS with a financial statement has been raised from $25,000 to $50,000.
This is huge change. The old 433A and 433F are very burdensome to taxpayers as well as practitioners.
Taxpayers who owe up to $50,000 in back taxes will now be able to enter into a streamlined agreement with the IRS that stretches the payment out over a series of months or years.
The maximum term for streamlined installment agreements has also been raised to 72 months from the current 60-month maximum.
Taxpayers seeking installment agreements exceeding $50,000 will still need to supply the IRS with a Collection Information Statement (Form 433-A or Form 433-F). Taxpayers may also pay down their balance due to $50,000 or less to take advantage of this payment option.
An installment agreement is an option for those who cannot pay their entire tax bills by the due date. Penalties are reduced, although interest continues to accrue on the outstanding balance.
In order to qualify for the new expanded streamlined installment agreement, a taxpayer must agree to monthly direct debit payments.
The IRS Offers in Compromise
The IRS recognizes that many taxpayers are still struggling to pay their bills so the agency has been working to put in place more common-sense changes to the OIC program to more closely reflect real-world situations.
For example, the IRS has more flexibility with financial analysis for determining reasonable collection potential for distressed taxpayers.
Generally, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay.
Fresh Start Tax L.L.C. is one of the premier tax resolution firms in the country. We deal with all types of civil cases including individuals, businesses, non-profits, partnerships and corporations.
We have staff that specialize in every facet of IRS Tax Representation.
We know all the IRS tax strategies because of our extensive IRS working backgrounds.
We were Former IRS Certified Tax Instructors that taught IRS Tax Law in the IRS Regional Training Center. Some of our many specialties include the following:
Areas of Professional Tax Practice:
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