Are you struggling to pay your taxes? If so, you are not alone. According to official data from the Internal Revenue Service (IRS), Americans owe a collective $131 billion in back taxes. Dealing with tax debt can feel overwhelming. The interest, penalties, and fees keep adding up—all while you are trying to pay the rest of your bills and get your financial house in order.
There is good news: The IRS Fresh Start program is a federal initiative that gives taxpayers more flexibility to settle their tax debt for less. In this article, our Chicago tax law attorney highlights the most important things you should know about the IRS Fresh Start program.
1. The IRS Fresh Start Program is For People Struggling to Pay Federal Taxes
If you are behind on your federal tax obligations, the IRS Fresh Start program might be the right path to get you back on your financial feet. Created in 2011, the Fresh Start program is designed to do exactly what its name suggests—help struggling taxpayers clear their debt and get a clean slate.
Under the 2011 IRS reforms, the agency has far greater authority and flexibility to allow taxpayers to resolve their federal tax debt for less. When you do so through IRS Fresh Start, you will get to clean up your account—potentially including relief from penalties and the removal of tax liens.
2. You May Be Eligible for an Offer in Compromise (OIC)
The IRS allows people to resolve outstanding federal tax debts through something called an Offer in Compromise or OIC. The Fresh Start program expands the flexibility of the OIC program. Simply defined, an Offer in Compromise is a settlement. It is an agreement between a taxpayer and the IRS to resolve all outstanding tax liabilities for less than the amount owed. A Chicago, IL tax lawyer can help you get a fair Offer in Compromise from the IRS—potentially settling all of your federal tax liability for a very small percentage of the amount owed.
3. The IRS Will Calculate ‘Collection Potential’ of a Taxpayer
Under the IRS Fresh Start program, the agency will calculate the “reasonable collection potential” from the taxpayer and use that information to formulate an Offer in Compromise. Notably, the Fresh Start program allows the agency to take more factors into consideration when determining how much can be collected. Under the new rules, the IRS will:
Contact Our Chicago, IL Tax Law Attorney for Help
At North Suburban Legal Services LLC, our Chicago IRS lawyers help people, families, and business owners solve tax problems. If you have any questions about the IRS Fresh Start program, we can help. For a free, fully confidential consultation with a skilled IRS attorney, please contact us today. We represent taxpayers throughout Cook County, including in Chicago, Elgin, Arlington Heights, Evanston, Schaumburg, Skokie, and Des Plaines.