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If you owe back taxes, the IRS Fresh Start Initiative can help

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  • YellowSubmarine
    2015-04-10 09:37:33 PM
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    Tax liens are no joke when it comes to owing the IRS back taxes. If you do owe for multiple years of back taxes and have yet to do anything about it, be aware that they can at any time put a lien on your bank account, or for that matter any equity you own such as property, vehicles, etc. Not to mention seriously hurt your credit score, or even your chances at getting approved for rental housing or even some jobs.

    But it doesn't have to come to that. And since I have taken advantage of some of these programs before with success, I thought I'd share some helpful info, as we are staring down Tax Day and all. And I'd be willing to guess there are more than just a few outliers that are super stressed over a mountain of back tax debt, not knowing what in the world to do about it.

    That's where the IRS's Fresh Start Initiative comes in. It's an IRS program made to help people most reasonably come to terms with their outstanding debt. Depending upon your situation, under this program you can qualify for installment payment arrangements or what's known as an Offer In Compromise.

    Also under this program, the IRS raised the limit in most cases of actually putting on harsh tax liens from $5,000 of tax debt up to $10,000. Which is a good thing. But if you know that you are pushing that $10,000 debt limit, or have since surpassed it, I would highly recommend using one of these options to settle the issue. OR at least get started on the path. One way or another, the IRS will claim its debt. It's best to be in contact with them and reach some kind of compliant agreement that's at least some what on your terms as well.

    The installment payments will be built around what you can reasonably afford to pay monthly. Or if you think you will never be able to pay back the amount due, no matter how long they give you, seriously consider the OIC. That will give you the ability to settle your tax debt at a far less amount that what you owe, if you can do so in the span of 2 years time. Hope this helps.. I know it worked for me, and now I am much less stressed about tax day.
  • JaredS
    2015-04-11 02:00:32 PM
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    Thanks for the information. I've also found myself in a situation where I owed a lot more than I could afford to pay right away, but they got me on a payment plan that is spread out over many years. It does seem like the IRS will work with you if you are willing to work with them. They would much rather get the money you owe without making it impossible for you to survive.
  • J.K.Logic
    2015-04-13 04:15:33 PM
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    As a self-employed, 1099 filer, I had to use the payment plan last year. That lump sum tax bill can seriously sneak up on you. And I was really not prepared. Luckily it is just like it sounds. Contact them online or over the phone, set up a payment arrangement, and done deal. It's pretty simple. And does work.
  • JaredS
    2015-04-13 10:12:06 PM
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    J.K.Logic Wrote: As a self-employed, 1099 filer, I had to use the payment plan last year. That lump sum tax bill can seriously sneak up on you. And I was really not prepared. Luckily it is just like it sounds. Contact them online or over the phone, set up a payment arrangement, and done deal. It's pretty simple. And does work.
    I am the same way. I just filed my taxes today and underestimated how much I needed to pay. My tax preparer set me up for a payment plan and I'm good to go. The IRS will work with you if you are willing to work with them.
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