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A Glance At The Not-So-New IRS Fresh Start Program

If you have been awake watching television late at night, you may have had the privilege of seeing an advertisement about the “New IRS Fresh Start Program”. This ad promised that you could settle your IRS tax debt for pennies on the dollar and that there have been new programs unveiled by the IRS to assist taxpayers during the COVID-19 pandemic. What these ads may neglect to mention is that the IRS Fresh Start initiative was actually implemented after the 2008 financial crisis to help alleviate the financial stresses and that there have been no substantive changes to IRS collection protocol since then.

The IRS Fresh Start Initiative was designed to provide a more common sense and consumer driven approach to the collection of certain IRS tax debts. The initiative raised the thresholds for the maximum amount that could be owed for a tax liability from $10,000 to $25,000 before the IRS would file a federal tax lien against your property and allowed for the withdrawal of an already filed lien if you owe $25,000 and are in a direct debit installment agreement. The IRS also provided longer terms for repayment of back taxes on amounts owed up to $50,000, moving the maximum allowable time for repayment to 84 months from the previously prescribed 60 months. There were also very limited revisions to the IRS calculations for the evaluation of Offers in Compromise. These revisions affected how future income would be calculated and the treatment of certain expenses for the IRS financial analysis of an Offer in Compromise.

If you are a taxpayer who owes less than $50,000, then the IRS Fresh Start Program could provide you a lifeline for getting your tax debt under control. However, if you owe more than $50,000 there are little to no provisions of this initiative that would in any way affect your repayment options or the lien filing requirement imposed by the IRS. The IRS has not issued any additional initiatives since the enactment of the Fresh Start initiative that changes the collections methods or applicable threshold for different IRS-sanctioned payment plans. There have been no meaningful changes to the IRS collection procedures since the beginning of the COVID-19 pandemic and the IRS has not indicated that there will be any changes implemented in the near future.

The IRS Fresh Start Initiative is not a new program and while it is beneficial for a certain number of taxpayers who may owe IRS debt, it is not a cure-all for all taxpayers to settle their IRS back tax debt for “pennies on the dollar”.  So, when you are watching these advertisements that are touting the benefits of the “new” IRS Fresh Start Initiative, it would be wise to take their claims with a proverbial grain of salt.

Adam Holleran, EA, JD

Timberline Tax Group, LLC

Keywords: Fresh Start Program

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