In 2011, the Internal Revenue Service announced a series of new steps to help people get a fresh start with their tax liabilities. The goal was to help individuals and small businesses meet their tax obligations, without adding unnecessary burden to taxpayers. Specifically, the IRS is announced new policies and programs to help taxpayers pay back taxes and avoid tax liens. This fresh start initiative provided various ways to lessen the negative effects of trying to resolve IRS problems.
What Relief does the IRS provide?
The IRS, under the Fresh Start Initiative, provides a number of ways to assist financially-distressed taxpayers.
1. Federal Tax liens
The Fresh Start Initiative created important changes to its lien filing practices that were designed to lessen the negative impact on taxpayers. The changes include:
- Significantly increasing the dollar threshold when liens are generally issued, resulting in fewer tax liens.
- Making it easier for taxpayers to obtain lien withdrawals after paying a tax bill.
- Withdrawing liens in some cases where a taxpayer enters into a Direct Debit Installment Agreement.
2. Installment Agreements
The Fresh Start Initiative also makes streamlined Installment Agreements available to more taxpayers including small businesses. The payment program will raise the dollar limit to allow additional taxpayers to participate.
3. Offer in Compromise (OIC)
Under the Fresh Start Initiative, the IRS has expanded the OIC program by adopting more flexible Offer-in-Compromise terms. This expansion may enable some of the most financially distressed taxpayers to clear up their tax problems, possibly more quickly than in the past. What is an Offer in Compromise? An OIC is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Generally, the IRS does not accept an OIC if they believe the liability can be paid in full as a lump sum or through a payment agreement. The IRS recognizes that many taxpayers are still struggling to pay their bills so they have put in place common-sense changes to the OIC program that more closely reflect real-world situations. This expansion focuses on the financial analysis used to determine which taxpayers qualify for an OIC.
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