The IRS Fresh Start Program Explained: Who Qualifies and How to Apply
If you’re struggling with back taxes or mounting IRS debt, the IRS Fresh Start Program may offer the relief you need. This initiative was designed to help taxpayers—both individuals and small businesses—resolve their tax liabilities through easier payment plans and settlement options.
In this guide, we’ll break down exactly what the IRS Fresh Start Program is, who qualifies, and how to apply.
What Is the IRS Fresh Start Program?
The IRS Fresh Start Program isn’t a single form or application—it’s a set of changes the IRS made to its collection policies to make tax relief more accessible.
The program’s goal is simple: help taxpayers get current and stay current without harsh enforcement actions like wage garnishments or bank levies.
Key components of the Fresh Start initiative include:
- Streamlined installment agreements for qualifying taxpayers
- Expanded eligibility for Offers in Compromise (OIC)
- Higher thresholds for when the IRS files a federal tax lien—and easier procedures to withdraw liens once paid
These reforms are meant to make it easier for taxpayers to repay what they owe, avoid penalties, and, in some cases, settle for less than the full balance.
Who Qualifies for the IRS Fresh Start Program?
Eligibility depends on which part of the program you’re applying for. Below is a breakdown of the main relief options.
- Streamlined Installment Agreements
Who qualifies:
- Individuals or small businesses with $25,000 or less in unpaid tax debt who can pay off the balance within 24 months.
- For debts under this amount, the IRS typically does not require a financial statement, making approval faster and simpler.
Additional statutory relief (IRC §6159):
If you owe $10,000 or less (excluding penalties and interest) and meet certain requirements—such as being current on filings and not having another installment agreement in the last five years—the IRS is required to accept an installment plan if the debt can be paid within three years.
- Offer in Compromise (OIC)
An Offer in Compromise allows eligible taxpayers to settle their tax debt for less than the full amount owed.
Who qualifies under Fresh Start:
- Taxpayers with annual income up to $100,000 and total liabilities under $50,000 may qualify for the streamlined OIC process.
General OIC requirements (IRC §7122):
- The IRS considers OICs when there is doubt as to collectibility, doubt as to liability, or when accepting the offer promotes effective tax administration.
- Most offers require an upfront payment:
- 20% of the offer amount for lump-sum offers, or
- The first installment for periodic payment offers.
- Low-income taxpayers (AGI ≤ 250% of the federal poverty level) may have these payment and application fees waived.
- Federal Tax Lien Relief
The Fresh Start initiative raised the amount of debt that triggers a Notice of Federal Tax Lien, giving taxpayers more time to act before liens are filed.
Additionally, once the balance is paid in full, taxpayers can request a lien withdrawal by submitting a written request to the IRS.
How to Apply for the Fresh Start Program
The application process depends on which relief option you’re pursuing. Here’s how to get started:
- For an Installment Agreement
- Apply online using the IRS Online Payment Agreement Tool.
- Or submit Form 9465, Installment Agreement Request, with your return or separately.
- Setting up direct debit or payroll deduction can simplify payments and may reduce penalties.
- For an Offer in Compromise
- Use the IRS OIC Pre-Qualifier Tool to determine eligibility.
- Submit Form 656, Offer in Compromise, along with Form 433-A (OIC) or 433-B (OIC) for financial disclosure.
- Include the required partial payment, unless you qualify for a low-income waiver.
- For Lien Withdrawal
- After paying your tax debt in full, send a written request to the IRS to withdraw the lien.
- Once approved, this can help restore credit and financial standing.
Additional Considerations
- Penalties and Interest: While approved installment plans may reduce failure-to-pay penalties, interest continues until the balance is paid.
- Ongoing Compliance: You must stay current with all future tax filings and payments to maintain eligibility.
- Appeals: If the IRS denies your request for an installment plan or OIC, you have the right to request an independent administrative review and appeal to the IRS Office of Appeals.
Conclusion
The IRS Fresh Start Program offers powerful tools to help taxpayers recover from financial hardship and regain control of their tax situation. Whether you need more time to pay, want to negotiate a reduced settlement, or are looking to remove a tax lien, the Fresh Start Program can provide a path forward.
However, applying correctly and understanding which option is best for you can be complex. A qualified tax professional can evaluate your situation, prepare accurate documentation, and negotiate directly with the IRS on your behalf.
Need Help with the IRS Fresh Start Program?
If you’re facing tax debt or have received IRS notices, our team at Accu-Tax & Advisory can help you navigate the Fresh Start Program and determine the best path toward resolution.
Contact us today to schedule a confidential consultation and start taking back control of your finances.
