What if an individual or a small business fails to pay the tax debts in time, and this failure will impose debt with more interest and penalties? This will make their finances unmanageable. Then what will they do? To resolve this and avoid unnecessary worry for taxpayers, the Internal Revenue Service initiated the Fresh Start Initiative in 2011. It is an initiative to relax a few conditions for efficient tax debt collection. It is not a new program, but it modified temporary tax remedies. It will give taxpayers a fresh start to pay their tax debts.
To avail of this Fresh Start program, there are conditions to meet. If individuals or businesses fail to meet the requirements, they will not qualify for this program. An overview of the key things mentioned in the Fresh Start Initiative to understand this program closely are as follows:
- Before this initiative, any entity seeking an installment agreement had to owe less than $25,000 in tax debt. After the initiative threshold was increased to $50,000, this relaxation increased the number of taxpayers who failed to pay their taxes.
- Before Fresh Start, one needed to owe less than $10,000 to access the streamlined agreement, which is a quick way to pay tax debts to the system, but now it has been relaxed to some extent.
- Tax debts are penalties, interest, and tax. It creates havoc and mismanagement of the tax accounts of any individual. Before you can follow the regulations and waive off some of your penalties, you need to have a strong, valid reason for the failure and what caused it descriptively, but later, some penalties can be removed and do not even require a strong reason.
- If any individual or any business fails to pay the tax of less than $5,000, the authority seizes their property and uses it as assets to recover debt, but now the maximum limit has been increased to $25,000.
- The offer in compromise became attractive, and now more taxpayers are eligible for it, but it is up to the IRS whether to accept or reject the application.
Overall, this new fresh start program will increase the efficiency of the taxation system and encourage taxpayers to pay their tax debts with a wide range of options, whichever suits any individual or corporation better. It proved to be a successful initiative by the IRS as it increased the number of taxpayers. It triggers the flow of stagnant debt procedures. Be sure to read more to gain additional knowledge about this topic.
