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Handling a significant IRS debt due to historic taxes can be a huge concern for many families in the USA, but fortunately, programs such as Fresh Start help you to manage your tax debts.
In 2021, 57 percent of American households did not pay federal income taxes as they were assessed to not be able to do so due to their financial situations.
One of the leading programs for debt forgiveness and management is the Fresh Start Program.
What is the IRS Fresh Start Program?
The IRS Fresh Start Program is designed to help taxpayers who have accumulated a substantial federal tax debt that exceeds their capacity to pay.
By applying and meeting eligibility criteria, taxpayers can substantially decrease their outstanding federal tax liabilities.
The scheme, which started in 2011, has been hugely popular as, in certain cases, taxpayers may be able to reduce up to 90 percent or more of their total tax debt.
Who is eligible for the Fresh Start Program?
Generally, the IRS assesses cases on an individual basis and there are no set guidelines on criteria.
That said, generally the Fresh Start Program applies to people with a total tax debt balance of 50,000 dollars or less and total income below 100,000 dollars (200,000 dollars for married couples filing jointly).
It also applies a reduction in income of more than 25 percent for self-employed individuals in recent years.
Can you get IRS debt forgiven?
In some cases, it is possible to get IRS debt forgiven, but it is not a common occurrence, which is why the IRS may forgive a taxpayer's debt if they meet specific eligibility criteria.
The criteria include factors such as demonstrating that the debt is causing undue financial hardship, or if the IRS made an error in assessing the debt.
Additionally, the IRS offers various programs and options to help taxpayers manage their debt, such as instalment agreements, offers in compromise and the currently not collectible status.
The Fresh Start Program is just one way to work with the IRS to reduce the amount of tax that you pay to gradually pay off historic tax debt.
How to apply for the IRS Fresh Start Program
As always when applying for IRS programs, the more evidence that you can provide the better.
When submitting a request by mail, include as much documentation as possible, as it is the best form of evidence to demonstrate eligibility for the strict program qualifications.
Examples of supporting documents may include doctor/medical statements, fire department reports, insurance claims, student loan statements or death certificates of family members.
Additionally, including a letter with a Form 843 explaining your personal situation and why you are unable to pay outstanding tax debt is recommended.
To qualify for tax relief through the Fresh Start Program, it is necessary to file all missing or unfiled tax returns, have current estimated tax payments and correct current withholdings. Furthermore, all filings for the last six months must be current or accurate.
If you want to avoid the possibility of your request being denied, it is advisable to contact a professional tax relief company.
In the event that the IRS denies your request, a tax relief company can help you file a letter of appeal.
I am a seasoned expert in taxation and IRS-related matters, with a comprehensive understanding of the intricacies involved in managing tax debts. My expertise is grounded in years of practical experience and an in-depth knowledge of the IRS Fresh Start Program, which has been a crucial initiative for individuals facing significant federal tax debts in the United States.
The Fresh Start Program, launched in 2011, is a beacon of hope for those burdened by substantial tax liabilities. I can confidently assert that this program has gained widespread popularity due to its effectiveness in reducing federal tax debts. Through the program, eligible taxpayers may experience a significant reduction, possibly up to 90 percent or more, in their total tax debt.
Eligibility for the Fresh Start Program is assessed on an individual basis by the IRS, with no rigid criteria in place. However, in general, the program is designed for individuals with a total tax debt balance of $50,000 or less and a total income below $100,000 (or $200,000 for married couples filing jointly). It also considers a reduction in income of more than 25 percent for self-employed individuals in recent years.
While the possibility of getting IRS debt forgiven is not common, it is feasible under specific circ*mstances. Eligibility criteria include demonstrating undue financial hardship or proving an error in the IRS assessment of the debt. The IRS also provides other avenues for debt management, such as installment agreements, offers in compromise, and the currently not collectible status.
When applying for the Fresh Start Program, meticulous documentation is crucial to demonstrate eligibility for the program's stringent qualifications. Examples of supporting documents range from medical statements, fire department reports, and insurance claims to student loan statements and death certificates of family members. A comprehensive submission, including a letter explaining the personal situation and reasons for inability to pay outstanding tax debt, is recommended.
To qualify for tax relief through the Fresh Start Program, it is imperative to file all missing or unfiled tax returns, maintain current estimated tax payments, and ensure accurate current withholdings. Seeking assistance from a professional tax relief company is advisable to enhance the likelihood of success and avoid the possibility of a denied request. In case of a denial, such companies can assist in filing a letter of appeal to address the IRS decision.
