In my book: Everything You Wanted to Know About the IRS – Audits, Appeals, and Collections, I discuss the IRS’s Fresh Start Initiative. The following is a condensed version of from that chapter in the book.
In an effort to collect back taxes, in February 2011, the IRS announced their Fresh Start Initiative. The goal of Fresh Start is to “help individuals and small businesses meet their tax obligations, without adding unnecessary burden to taxpayers.” The announcement specifically targeted taxpayers that owed back taxes and either had liens against them or were about to have a lien filed.
The announcement if February of 2011 made the following changes to the IRS’s collection process:
· Significantly increased the dollar threshold for when they would issue liens
· Made it easier for taxpayers to obtain lien withdrawals after paying their tax bills
· Withdraw liens in most cases where a taxpayer entered into a Direct Debit Installment Agreement
· Created easier access to Installment Agreements for small businesses that were struggling
· Expanded a streamlined Offer in Compromise program to cover more taxpayers
With this program the IRS significantly increased the dollar thresholds when liens are filed. Typically the IRS will file a lien on a taxpayer that owes $25,000.00 or more to the Service. In IR-2011-20 the IRS didn’t state what the significant amount would be, but said they would announce that amount.
The IRS also modified its standards on taxpayers trying to obtain lien withdrawals.
Lien withdrawals will now occur once the taxpayer makes payment in full, if the taxpayer requests it. In order to speed up the process for which liens are withdrawn the IRS decided to streamline the process to allow collection personal to withdraw liens.
As we will go into in great deal tomorrow, the IRS made a fundamental change to its Installment Agreement program. In some cases filing the Installment Agreements will remove liens and stop liens from occurring in the first place. In general the IRS will allow lien withdrawals under several scenarios:
· Taxpayers entering into a Direct Debit Installment Agreement
· If a taxpayer on a regular Installment Agreement, converts to a Direct Debit Installment Agreement.
· On existing Direct Debit Installment Agreements upon taxpayer request
The liens will be withdrawn after a probationary period demonstrating that direct debit payments are being honored.
If that wasn’t good enough on May 21, 2012 the Internal Revenue Service expanded the Fresh Start Program. This time they the offered more flexible terms to their Offer in Compromise Program. “This phase of Fresh Start will assist some taxpayers who have faced the most financial hardship in recent years,” said IRS Commissioner Doug Shulman. “It is part of our multiyear effort to help taxpayers who are struggling to make ends meet.”
On Friday we will go into more detail on Offers in Compromise, but as a preview, under Fresh Start, and in certain circumstances, the changes to the program include:
· A major revision on the calculation of a taxpayer’s future income
· Allowing taxpayers to repay their student loans
· Allowing taxpayers to pay state and local delinquent taxes
· Expanded the Allowable Living Expenses allowance category and amount
In addition to these changes the IRS made changes to the program allowing payments to be made within 24 months of the date the offer is accepted.
As you can see, if you have been putting off paying the IRS, now is the best time to get your account back in good standing
For more information visit www.smalleynco.com
If you have any questions you can email Craig W. Smalley E.A.
Author of the books: It Starts With an Idea – Tax Tips for Small Businesses available on Nook and Kindle, The Ultimate Real Estate Investor Tax Guide, available on Nook and Kindle, The Complete Guide to the New Tax Law – American Taxpayer Relief Act of 2012 available on Nook and Kindle, Everything You Wanted to Know about the IRS – Audits, Appeals and Collections available on Nook and Kindle, Tax Avoidance is Legal! The Complete Guide to Individual Income Tax available on Nook and Kindle , and The Complete Guide to the Affordable Care Act’s Tax Provisions available on Nook and Kindle
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