Q:

What is a Fresh Start program?

A:

Quick Answer

The IRS Fresh Start program increases the amount of money taxpayers can owe before the IRS files a lien on them, and it provides a monthly installment plan that helps taxpayers settle the debt for less than the amount owed. Its purpose is to make it easier for individuals to qualify for alternative payment programs and to provide an incentive to settle past-due claims.

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Full Answer

Historically, the IRS allows up to 60 months for taxpayers to repay their debts, but the Fresh Start program modifies that time limit to 72 months, adding a full year.

The Fresh Start program was introduced to acknowledge that taxpayers are having increasing difficulty paying their taxes when due. Its purpose is also to encourage people to file on time even if they cannot afford to make payments, and the expansion of the installment plans offers an alternative payment route to struggling individuals and small-business owners. Taxpayers who owe less than $50,000 no longer need to provide detailed financial information to assess their reasonable collection potential. They are only required to submit one to two years of projected income instead of five.

To avoid bank levies or wage garnishes, taxpayers should always remain in contact with the IRS. Once an installment plan has been agreed upon and established, there is no further threat of levies so long as the required amount is paid.

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