IRS Fresh Start program: What it can and can't do for your tax debt

Officials warn about misconceptions regarding Fresh Start Relief program as it is used to mislead the customers by third parties.

The officials have issued warnings on misunderstanding IRS’s “fresh start” program. The Tax relief program has been around for a while but is still widely misunderstood by the citizens. The warnings address the use of the program's name by tax relief companies to mislead the consumers.

Each year, millions of Americans are impacted by tax debt. (REUTERS)

Each year, millions of Americans are impacted by tax debt, however only a few seek help resolving the issue. The ever changing tax laws make it difficult for them to understand the complexities of programs like the IRS' fresh start.

The ‘Fresh Start’ relief program

An original announcement by the IRS over a decade ago clarifies that the program was started with the purpose of easing the tax fulfillments of the individuals and small businesses without adding unnecessary pressures. Over a period of time, the tax collecting agency has reformed several procedures to help Americans repay their tax liability. The fresh start program initially impacts three areas of the tax relief which are Offers in Compromise, installment agreements, and tax lien policies.

The common misconception

The most commonly prevailing misconception for the “fresh start” program is that it is a standalone tax relief option for the Americans. Instead, it is a series of changes to existing IRS policies that helps manage debts by increasing eligibility and relieves certain requirements for tax relief benefits.

Taxpayers must be aware that full debt elimination is rare and requires them to meet the strict IRS criteria. The processing time can also vary and go up to one year.

Third party tools must be avoided

To check their eligibility, the taxpayers are encouraged to directly use IRS.gov Offer in Compromise pre-qualifier tool by submitting relevant documents and details. Experts have warned the taxpayers of the third party eligibility testers as they are used by corporations to collect personal information.

The third parties manipulate customers into believing that they can help them by relieving them of their debt. The law firm clarifies that, “The truth is, they cannot give you any kind of exclusive access to tax relief options, and there is no special program available,”.

“Instead, the IRS offers relief options such as Offers in Compromise, Currently not Collectible status, Innocent Spouse Relief, and Penalty Abatement, which all have strict qualification criteria,” clarified Wiggam Law. Only the IRS can qualify taxpayers for the relief if they meet the strict criteria for various programs.

Taxpayers can apply for Fresh Start Relief by applying for an Offer in Compromise or an Installment Agreement using the lenient rules introduced during the period.