The IRS Fresh Start Initiative
Call me at (480) 292-7604 for a FREE telephone consultation to determine if you qualify.
Colleen E. Harrison, Enrolled Agent
Former IRS Revenue Agent, Retired from Civil Service
35+ Years of Accounting and Taxation Experience
Let me begin my explanation of what the IRS Fresh Start Initiative is NOT. The term "Fresh Start" often brings to mind the idea of a bankruptcy wherein all debts or certain debts can be discharged. It is not a bankruptcy. Seldom, if ever, are all your back tax debts forgiven by the IRS. True, in very dire circumstances of financial hardship, poor health, disability and serious problems affecting someone in the present and for the long run, taxes may be partially or completely forgiven. Realize that this is the exception and definitely NOT the norm. The IRS Fresh Start Initiative is NOT a quick fix for your tax problems.
What this Fresh Start does do is allow you to pay your tax debt on an installment agreement which has been extended to 6 years or 72 months. If you can make a streamlined payment each month up to a total of 72 months, you can enter into this agreement without revealing personal financial information such as your assets, liabilities, income and expenses. However, if you can not make a streamlined monthly payment over a period of time not to exceed 72 months, you will have to complete a financial information statement. This information is placed on Form 433-F. Liens are generally filed when tax debts are owed. Expect a tax lien unless you have a repayment agreement that meets the criteria plus have the monthly amount directly debited to your bank account. There are different installment agreement fees which must be paid depending upon your financial circumstances and whether your payment is handled through direct debit. It is a one time fee that can be added to your installment agreement.
How much can you owe and qualify for this type of installment agreement? If you owe on federal income taxes such as on Form 1040, the maximum you owe must be under $50,000 (that includes taxes, interest and penalties). For payroll taxes it must be under $25,000.
Payment Plans, Installment Agreements
If you're financially unable to pay your tax debt immediately, you can make monthly payments through an installment agreement. As long as you pay your tax debt in full, you can reduce or eliminate your payment of penalties or interest, and avoid the fee associated with setting up the agreement.Before applying for any payment agreement, you must file all required tax returns.
You may be eligible to apply for an online payment agreement
- Individuals must owe $50,000 or less in combined individual income tax, penalties and interest, and have filed all required returns.
- Businesses must owe $25,000 or less in payroll taxes and have filed all required returns.
- If you meet these requirements, you can apply for an online payment agreement.
- Please note: If you file joint tax returns with your spouse, you may be unable to complete your installment agreement request using this application. Please click here for more information.
Even if you're ineligible for an online payment agreement, you can still pay in installments
Small Businesses can apply for an in-Business Trust Fund Express installment agreement
- Call the IRS Business and Specialty Tax assistance line 800-829-4933;
- Call the phone number on your bill or notice;
- More information
Understand your agreement & avoid default
- Your future refunds will be applied to your tax debt until it is paid in full;
- Pay at least your minimum monthly payment when it's due;
- Include your name, address, SSN, daytime phone number, tax year and return type on your payment;
- File all required tax returns on time & pay all taxes in-full and on time (contact us to change your existing agreement if you cannot);
- Make all scheduled payments even if we apply your refund to your account balance; and
- Ensure your statement is sent to the correct address, contact us if you move or complete and mail Form 8822, Change of Address (PDF).
If you don't receive your statement, send your payment to the address listed in your agreement.There may be a reinstatement fee if your agreement goes into default. Penalties and interest continue to accrue until your balance is paid in full. If you are in danger of defaulting on your payment agreement for any reason, contact us immediately. We will generally not take enforced collection actions:
- When an installment agreement is being considered;
- While an agreement is in effect;
- For 30 days after a request is rejected, or
- During the period the IRS evaluates an appeal of a rejected or terminated agreement.