A&W Tax Services

The IRS Fresh Start Program: What It Really Is and Who Qualifies

You've probably heard ads promising the IRS Fresh Start program can wipe out your tax debt. The reality is more useful and less dramatic. Fresh Start isn't one program you apply for. It's a set of IRS policy changes, introduced in 2011 and expanded in 2012, that made it easier to pay over time, avoid liens and settle debts you truly can't pay.

By the Enrolled Agents and CPAs at A&W Tax Services · Updated

What Fresh Start changed

  • Streamlined installment agreements: individuals who owe $50,000 or less in combined tax, penalties and interest can usually get a payment plan without detailed financial statements
  • Fewer tax liens: the IRS generally doesn't file a Notice of Federal Tax Lien for balances under $10,000
  • Lien withdrawals: taxpayers on a direct-debit installment agreement for a qualifying balance can ask to have a filed lien notice withdrawn
  • More flexible offers in compromise: the IRS changed how it calculates future income, making settlements realistic for more people who can't pay

Which option fits you

  • You can pay over time: a streamlined installment agreement, often set up online
  • You can't pay anything now: currently not collectible status pauses collection
  • You can never pay the full amount: an offer in compromise may settle it for less
  • Penalties make up a large part of the balance: first-time abatement or reasonable cause relief

Be careful with tax relief ads

The IRS has warned about companies that advertise settlements for pennies on the dollar, charge large upfront fees, and then file applications that are rejected. Most people don't qualify for an offer in compromise: the IRS accepts it only when the offer reflects what it could realistically collect. Before you pay anyone, ask who will represent you and whether they're an Enrolled Agent, CPA or attorney, the only professionals with unlimited rights to represent taxpayers before the IRS.

Before you apply for anything

  • File all required tax returns. The IRS won't approve most plans until you're current
  • Pull your IRS account transcripts to confirm the balance
  • Make any estimated tax payments due for this year
  • Use the IRS Offer in Compromise Pre-Qualifier tool at irs.gov before paying an application fee