What is the Fresh Start Initiative?

The IRS introduced the Fresh Start initiative in 2011 in recognition of the slow economic recovery. It is a series of policies that aim to help struggling taxpayers with three components that make it easier and more flexible to pay off tax debt. The IRS adjusted the scope of Fresh Start in 2012 and 2013 according to feedback and reactions.

The Fresh Start initiative is made up of the following policies:

• Penalty Relief: Taxpayers who have been unemployed for at least 30 consecutive days during the fiscal year and up to the tax deadline can request penalty relief. Those who are eligible receive a six-month extension to fully pay their taxes plus interest — but they are not required to pay any penalties.

• Installment Agreements: Taxpayers who owe $50,000 or less can set up an installment agreement of monthly direct debit payments over the course of up to six years. This gives the taxpayer more time to pay and catch up on back taxes. If a taxpayer owes more than $50,000, they can pay down their balance to qualify for this option.

• OIC: An OIC allows a taxpayer to settle their tax debt for less than the full amount owed. The Fresh Start expanded the OIC program to cover a larger group of struggling taxpayers.

If you think you might qualify for the Fresh Start initiative, contact a tax accountant to review your options. A tax accountant will review your entire financial condition, including year-to-date income, equity in assets, a 401k, liquidity in cars, boats or other machinery and proof of monthly expenses to get a full picture of your situation and determine the best resolution.