Skip to main content
Tax Problem Help

IRS Fresh Start Program: What You Need to Know

In 2011, the IRS announced its Fresh Start Program to mitigate the lasting effects of the Great Recession. The goal of the IRS Fresh Start Program is to make it easier for taxpayers to obtain relief from tax debt with more reasonable payment alternatives than in the past. Here are three ways the program can help you minimize the impact of back taxes on your financial wellbeing.

1. Minimizing Liens

To minimize the number of liens issued for tax debt, the IRS Fresh Start Program increases the dollar amount at which liens are issued. Except in unusual circumstances, the IRS will not file a Notice of Tax Lien unless a taxpayer owes at least $10,000 in back taxes. This increase better reflects the impact of inflation since the IRS last changed its guidelines.

These changes also make it both easier and faster to have a lien withdrawn after you pay your back taxes or enter into a Direct Debit Installment Agreement (DDIA) with the IRS. A taxpayer may qualify to have a Notice of Tax Lien withdrawn upon payment of the tax debt or entering into a DDIA when the debt is $25,000 or less. You must make three DDIA payments before requesting withdrawal of the lien. This lets the IRS know that you can afford to make payments toward your installment agreement each month via direct debit.

2. Making Installment Agreements Easier

The Fresh Start initiative allows more people with tax debt to qualify for installment agreements. Under the IRS Fresh Start Program, individuals owing up to $50,000 to the IRS can now use installment agreements to alleviate their tax debt—without a financial statement. Taxpayers with the ability to pay their back taxes in full within six years (previously limited to five years) no longer need to provide financial statements if they agree to a DDIA payment plan. As a result of COVID-19, the IRS has made additional installment plans available for debts exceeding $50,000 with repayment periods exceeding six years.

The installment agreement options for small businesses also improved under the IRS Fresh Start. Now, small businesses can qualify for two-year-long installment agreements on tax debt up to $25,000.

3. Expanding Offer in Compromise

Lastly, the Fresh Start initiative expands access to Offer in Compromise (OIC), allowing more taxpayers to qualify for the program.

When the IRS considers the amount you should pay under an OIC, it looks at your income, expenses, and assets. The offer you make to the IRS under an Offer in Compromise depends on your excess monthly income after allowable living expenses. This is now multiplied by a specific time period of either 12 or 24 months, depending on your offer. This is considerably less than the previous multipliers of 48 and 60 months. This change results in qualifying taxpayers offering much less under the Fresh Start Program than under the old rules.

Take Advantage of Fresh Start Tax Relief

Learn more about how the IRS Fresh Start Program and tax professionals at East Coast Tax Consulting Group can put an end to your back tax problems. We’ll work with you to tailor a tax resolution strategy that fits your specific needs. Contact our team today.


Contact Us 

You deserve the best in IRS tax representation, tax preparation, and tax planning services. At East Coast Tax Consulting Group, you’ll work with a licensed CPA who will handle your case from beginning to end. We invite you to contact our team to schedule a free, confidential consultation.