The IRS is Helping Delinquent Taxpayers Make a Fresh Start
Do you still have a big tax bill that you think will take a long time to pay? Has it been holding up your life? If so, 2020 may be your year to get moving again.
Fresh Start Makes it Easier to End a Tough Chapter of Your Financial Story
You may have heard about the IRS Offer-in-Compromise (OIC), where you submit an offer to pay less than you owe due to your circumstances. The IRS’s Fresh Start initiative has made the OIC program even more flexible and applies to both individual taxpayers and small businesses.
Helping You Cross the Finish Line and Close Out Overdue Taxes
The Fresh Start Initiative isn’t new for 2020, it has been around since 2011. The IRS has been working hard to help taxpayers catch up.
You Could Settle Tax Debt in Two Years or Less
It can take four or five years to resolve even moderate tax bills including penalties and fees. Fresh Start is helping many quickly close out the balance that has led to them receiving letters, phone calls, and collection action from the IRS. It’s an excellent opportunity, but it’s for people that the IRS believes could otherwise be difficult to collect from.
How the Fresh Start Program Differs from Standard OIC Practices
The Fresh Start Program added some common-sense modifications to OIC-based deals. It also changes the financial analysis that the IRS uses to determine what offers to accept. For example, depending on your circumstances, with Fresh Start the IRS may now:
- Change the picture of how much money the IRS expects you to earn in the years to come.
- Let you include paying your student loan bills.
- Let you include payments on your delinquent state and local taxes.
- Give more room for the Allowable Living Expense that covers your costs of daily living.
In other words, they are less interested in putting financial issues on hold while you settle tax debt with them.
Less Emphasis on Money You Don’t Have in Hand
The IRS Fresh Start Program looks at what you can really pay in hard times. If you’ve been spending on non-essential items instead of paying off your taxes, what they call “dissipated assets,” the IRS typically counts that money as what you could have paid, but possibly not now. The IRS is also being more relaxed about “income-producing assets,” typically small businesses that are still operating, and not counting your share of the business value towards what you can pay.
So, the IRS is cutting you some slack by being a bit more realistic, which is especially helpful considering the times. They’re also cutting back on how far into the future they look at your income. Here’s how they tighten the number of years of income they consider based on the length of payments you’re offering:
Five months (or less) — one year instead of four.
Six to 24 months of payments — two years instead of five.
Overall, you’ve still got to finish paying off the OIC deal within 24 months.
Start for Free with Wiztax today and Wiztax will calculate and display you Offer amount instantly!
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