Back Tax Debt, Tax Liens, Offer In Compromise, Tax Returns
Many taxpayers who owe back taxes to the IRS still hear about the IRS “Fresh Start” Initiative on the airwaves. Many advertisements use the Fresh Start Initiative as an opportunity to settle back taxes with the IRS.
The Fresh Start Initiative began as a series of significant IRS collection policy changes in 2011 and 2012 to help taxpayers who were struggling to pay their back taxes owed. There were two major announcements of changes made to IRS collection policy. All of these policy changes are still in effect today.
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2011: Relaxing lien filing criteria and installment agreement terms
In 2011, the IRS made several changes that provided relief from federal tax liens and allowed more taxpayers to get favorable payment terms with the IRS.
Relaxed lien-filing criteria: the IRS reduced the threshold to file a tax lien for taxpayers who were not in a qualifying installment agreement and owed the IRS. The threshold increased from $5,000 to $10,000.
Ability to request lien withdrawal: taxpayers were given the opportunity to have their tax lien withdrawn if they met certain criteria.
Expansion of payment terms: the IRS expanded its streamlined payment plans by increasing the streamlined installment agreement threshold from $25,000 to $50,000. The IRS also increased the time to pay the balance owed from 60 to 72 months. Streamlined installment agreements have always allowed taxpayers to easily obtain an installment agreement, get more favorable payment terms, and importantly – avoid the filing of a federal tax lien. Taxpayers who obtained a streamlined installment agreement were now able to avoid a tax lien if they paid by direct debit on balances between $25,000 and $50,000.
In 2011, the IRS also emphasized to its employees that taxpayers who owed any amount should be able to pay over 6-years on their current budget. Previously, IRS collection agents tried to maximize the monthly payments made by taxpayers by limiting discretionary monthly expenses paid in determining their monthly payment plan amount. Fresh Start made it clear: if a taxpayer can pay within 6-years (or the collection statute, whichever is shorter), the IRS can allow for a taxpayer’s discretionary expenses (the IRS calls these expenses “conditional” expenses – that is, taxpayers can have them on the condition that they pay within 6 years).
2012: Changes to the Offer in Compromise Program
In 2012, the IRS made more changes. Most of these changes allowed more taxpayers access to the Offer in Compromise (OIC) program.
The IRS made the OIC program more attractive because it allowed additional expenses and reduced the assets that needed to be included in an OIC. The most significant change was to reduce the amount of the offer for those who qualified for an OIC.
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If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
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