Debunking Misconceptions about the IRS Fresh Start Program

Over a decade ago, the IRS announced a Fresh Start program to help taxpayers get out of tax debt. This verbiage became extremely popular, leading many people to believe they could get their debts forgiven. 

But this “program” isn’t something you can apply for and get your tax bill paid off. In fact, there is no actual Fresh Start program that the IRS itself markets anymore. The IRS used the Fresh Start terminology in 2011 to talk about the offer in compromise tax relief option, in addition to a few other tax relief avenues the agency provides. 

Still today, you may see ads promoting the Fresh Start program. There is a lot of misleading information out there about getting tax relief, and some ads are even intentionally deceptive. You may see ads coming into your email inbox, in the form of text messages, or even radio ads. This terminology is completely driven by the tax debt industry. Don’t get tricked into working with a misleading or even fraudulent company.

This article debunks these misconceptions so you have the truth behind the IRS Fresh Start program and actual tax relief options you can consider.

What Is the IRS Fresh Start Program, Really?

In 2011, the IRS introduced its Fresh Start initiative in an attempt to help Americans pay off their tax debts. But this is only an effort to highlight existing tax relief options. It isn’t a specific and comprehensive program taxpayers can apply for to get their tax bill paid off. 

“Fresh Start” is a term for the group of tax resolution options the IRS offers taxpayers. These include options like the offer in compromise, currently not collectible status, and installment agreement. 

Common Misconceptions About the Fresh Start Program

It’s hard to sift through all the tax advice out there. But here are three misconceptions debunked regarding the IRS Fresh Start program and how to avoid falling for this language:

Misconception 1: You can apply for the IRS Fresh Start program.

Many taxpayers want to turn to the Fresh Start program when they need help affording their tax bill, thinking they can apply to it just like they would any debt relief program. But that’s not how it works. The Fresh Start program is simply a set of tax resolution options. 

Taxpayers should talk through their options -for tax resolution with a tax expert, find the one that they’re eligible for, and request that option by following the IRS’s instructions carefully. 

Misconception 2: Everyone qualifies for the Fresh Start program.

Another myth is that all taxpayers qualify for Fresh Start. The truth is, each tax resolution process has its own set of eligibility requirements. There isn’t a universal qualification for getting tax relief with the IRS.

For example, to get penalty relief, you usually have to have a history of good tax compliance. Your debt must be under certain thresholds to qualify for certain types of installment agreements, such as $50,000 or $100,000. And you have to show a financial hardship if you are applying for a temporary hold on collections. 

Misconception 3: The Fresh Start program is a limited-time offer.

This language is used by tax resolution companies to get you to act fast. They make it sound like if you don’t do something right now, you’ll miss your chance for getting tax debt relief. But the changes made in 2011 are ongoing and are integrated into regular IRS procedures. Fresh Start isn’t a limited-time offer.

However, remember that you do need to take action to pay off your tax balance to avoid further penalties and interest building up on your bill.

Misconception 4: All of your tax debt will be paid off with Fresh Start.

Unfortunately, most people will not have their tax bill eliminated with the IRS tax relief options. However, you could come to a settlement with the IRS to reduce your amount owed through options like an offer in compromise. 

This option is when you send in an offer of what you can afford to pay against your tax debt, and the IRS will evaluate your financial situation to determine whether the amount is all they can reasonably expect to collect from you.

Misconception 5: Businesses aren’t eligible for the Fresh Start program.

Many business owners think the Fresh Start initiative is only for individuals. However, businesses can also qualify for tax resolution options. What you qualify for will depend on your specific situation and type of business, so always ask a tax professional about your options.

Avoid Falling for “Fresh Start” Sales Pitches

The Fresh Start terminology is often used by companies to get you to hire them. They use misleading language to make you think you can apply to a special program. Often, these companies make it sound like you have to act immediately or else you’ll miss your chance. 

Don’t make the mistake of thinking you’ll get some kind of exclusive access to an IRS program through these ads. What they are really referring to are all the tax relief options from the IRS, discussed in the next section. 

Always do your due diligence when finding tax assistance. Work with tax advisors who are reputable and don’t try to mislead you with deceptive marketing tactics. 

Tax Resolution Options Available to Taxpayers

So, what kind of tax relief programs does the IRS actually offer? The following tax resolution options fall under the umbrella of what the IRS once called the Fresh Start program:

• Installment agreements: Setting up a payment plan is one of the most common tax relief options. You can request a payment plan online if you qualify, and you can set up either a short-term or long-term plan, depending on your tax liability. An installment agreement allows you to pay off your tax debt in monthly payments.
• Offers in compromise: With this option, the IRS allows you to settle your tax debt for a lower amount than what you owe. If you’re unable to pay your balance or doing so would create a financial hardship, the IRS may agree to your settlement offer. 
• Delays in collection: You may be able to temporarily delay collections with the currently not collectible (CNC) status. The IRS will review your financial information and decide whether to cease collections. However, you will eventually have to pay your balance when your financial situation improves.
• Tax lien withdrawal: When you continue to have a tax balance and you haven’t set up a payment plan, the IRS may eventually file a federal tax lien on your property. If you get into this situation, you may be able to apply for lien subordination, which allows your other creditors to be ahead of the IRS in line for repayment, or lien withdrawal, which will remove the Notice of Federal Tax Lien from public records. Talk to a tax expert about these options before doing anything.
• Tax penalty relief: Another form of tax relief is getting your penalties waived or reduced. You may qualify for first-time penalty abatement if you have filed and paid everything in the last three years and didn’t have any penalties in that time frame. This option can help you reduce the penalties that you’re hit with on top of your existing tax liability. 
• Tax filing extension: You can also apply for a tax extension—but remember, this only applies to filing your tax return, not paying off your tax debt. An extension will give you another six months to file, but you still have to pay what you owe by the original tax deadline.

These options all have specific eligibility requirements, so make sure you talk to a tax attorney when you’re considering the best path forward. You want to take all the right steps as soon as possible to avoid further penalties and interest from building, not to mention legal action.

How to Find a Legitimate Tax Relief Service

Because many tax resolution companies market with misleading language, how do you know who to trust? There are a few characteristics to watch for to ensure you work with someone reputable and avoid scams:

• Avoid any company that uses language implying that you can apply for the IRS Fresh Start program.
• Be wary of any service that pushes you to act fast to avoid missing out. 
• Watch out for marketing tactics that promise you complete tax debt forgiveness.
• Read online reviews and testimonials of tax organizations. 
• Check a tax preparer’s qualifications through the IRS Directory of Federal Tax Return Preparers.
• Never give your personal information to someone that texts, calls, or emails you without verifying they are legitimate tax professionals or the IRS.

Working with a verified, legitimate tax relief company ensures you aren’t falling prey to any kind of empty promise or scam. You’ll also get access to experienced CPAs and tax attorneys when you go with a reputable firm. Always be cautious when you receive any kind of ad regarding tax relief.

The Reality of the IRS Fresh Start Program

Unfortunately, there is no one IRS program that will ensure your tax debt gets paid off. Many tax resolution companies and even scammers use language about the IRS Fresh Start program to get your business or your personal information. In reality, the Fresh Start program represents a set of tax relief options from the IRS, including installment agreements and offers in compromise. 

Whatever your tax debt situation is, contact a reputable tax professional who can provide personalized advice. You need to know the right way forward to avoid building penalties and debt or even legal action from the IRS. Contact the team at W Tax Group to schedule a consultation. We will help you explore legitimate tax relief options to help you get on top of your tax debt.