Have you received an IRS Audit letter indicating that you owe money for back taxes? Have you been subject to a tax lien? Is your business suffering due to unpaid taxes? For those who qualify, the IRS Fresh Start Tax program may provide some help. The program has three provisions:
An Installment Agreement gives you more time to pay back any back taxes you may have. To do this, the IRS takes a look at your income and expenses, then lays out a monthly payment plan.
Previously, a taxpayer would have to owe $25,000 or less to request an Installment Agreement. However, under the Fresh Start program, that amount has been increased to $50,000. This plan can last up to six years (as opposed to the previous five years), and can be negotiated with the IRS.
Even if you owe greater than $50,000, you may apply for a plan by providing a financial statement.
If you owe money to the IRS, they may file a tax lien against your property. You may file for a withdrawal of such a lien if you meet certain requirements, in addition to paying the amount you owe. The Fresh Start program has made it simpler for you to get tax liens removed.
Firstly, the program has increased the IRS Notice of Federal Tax Lien filing threshold from $5,000 to $10,000. This means that you must owe at least $10,000 before the IRS can file for a tax lien on your property (however, they can still file for a lien on amounts owed below $10,000 in rare circumstances.)
Second, the program allows the IRS to withdraw a tax lien after the lien has been released. This means that you have paid the total amount of the lien to the IRS, you have filed your past three years of tax returns, and you have paid any tax payments or deposits. The lien will still remain on your credit report for around seven years, but the withdrawal of the lien will help your credit score and aid in getting loans.
If the IRS sees that you simply can’t afford to pay the full amount you owe, they are now more likely to simply reduce your debt to what you can pay. This is referred to as an Offer in Compromise. The Fresh Start has made the IRS more flexible in deciding who qualifies for this option; however, special circumstances must apply.
Broadly speaking, the IRS may reduce your tax debt to the total amount of the debt they can expect to collect from you within “a reasonable period of time.” However, if they determine that you have the ability to pay your total debt (either in a lump sum or installment agreement), they will not accept your offer.
While the IRS Fresh Start program makes it easier for taxpayers experiencing financial trouble to get out of the red, each component of the program requires careful research. When dealing with the IRS, knowing your rights is essential. With master’s degree in tax law from Emory University School of Law and 30 years of experience, Jeffrey L. Cohen is fully prepared to tackle your tax problems. Mr. Cohen has significant experience dealing with the IRS, and will use his knowledge and experience to help you find solutions to your tax problems.
Please call us for a Free Phone Consultation at 404-937-1414.