Having a Fresh Start – Your Tax Debts

Having a Fresh Start – Your Tax Debts

Posted by on Oct 25, 2016 in Blog |

Owing the IRS has become slightly less painful since they loosened the rules for people who are struggling to pay their IRS tax debts. The goal is to make it easier for individuals and small businesses to pay back taxes and to avoid IRS tax liens. The IRS’ new rules are part of its ‘Fresh Start’ programme now available. If you qualify, the Fresh Start can help you with IRS tax forgiveness, a reduction in IRS tax penalties and a reduction in the amount of paperwork you need to provide the IRS. The most important part of this new programme apply to IRS instalment agreements and the Offer in Compromise programme.

An instalment agreement gives taxpayers who owe the IRS and are unable to immediately pay, the option of paying over time. The Fresh Start programme has made it easier for taxpayers to qualify for a streamlined instalment agreement. In order to qualify you must set up a monthly direct debit payment and have your tax returns filed up to date. Companies such as http://www.genesistaxres.com can give you advice on how to set up a payment plan and guide you through the paperwork required to set up instalment agreements with the IRS. If you owe fifty thousand dollars or less you can qualify for a streamlined instalment agreement. Under the old rules, you could not owe more than twenty five thousand dollars. The main advantages are that you pay less in penalties, interest continues to accrue on the debt but the late pay penalty is greatly reduced. You don’t have to submit your full financial information to the IRS in order to qualify and you have six years instead of five to repay your tax debt.

If you owe more than fifty thousand dollars in tax debt you are required to submit an IRS collection information statement. You can also pay down your debt to fifty thousand dollars so you qualify for the streamlined instalment agreement. The Offer in Compromise programme is one that allows you to settle your tax debt for less than you owe if you can prove to the IRS that you cannot afford to pay back the debt. The Fresh Start has relaxed the rules for qualifying for an Offer in Compromise which has expanded the number of taxpayers who are eligible to qualify. The IRS will now look at two years of future income for most Offers in Compromise instead of calculating projected future income over the entire time remaining to collect on the tax debt, which could have been as long as ten years. You can now have the monthly payment you make on your federal student loans counted as part of your monthly allowable living expenses, as long as you can supply proof you are making the payment. Your monthly payment to pay delinquent state or local taxes may now also be recognised as an allowable living expense.