If you are in debt to the IRS, you might be eligible for help to repay what you owe. The IRS offers a Fresh Start Program to those who meet certain criteria, allowing them to make payments over a fixed period without having to worry about incurring penalties or wage garnishments. 

What Is the Fresh Start Program?

The Fresh Start Program is designed to help people who owe money to the IRS. It allows individuals to make monthly repayments over a six-year period until their debt is cleared. The monthly payments are calculated based on the amount owed and the taxpayer’s income and assets. The program makes it easy and affordable for certain people to pay off accumulated debts and can help them avoid paying even more in interest, tax liens, wage garnishments, penalties, and asset seizure. 

Who Qualifies for the Fresh Start Program?

The Fresh Start Program is designed to help those who owe $50,000 or less to the IRS and have never before owed the agency money. If you are in this position, you can request to enroll in the Fresh Start process at any point. The program is open to individuals and businesses that owe the government money yet might be facing financial hardship due to unemployment or other personal circumstances.

What Does Fresh Start Involve?

If you are an individual taxpayer and you qualify for Fresh Start, then you will need to make sure your current tax filing is up to date, including for the current tax year. You will need to be in a position to pay off your remaining debt within the six-year period allowed, and you will need to review and agree to the direct repayment agreement that will set your installment due dates. The IRS will consider your income and expenses and make sure you have enough to live on when calculating your monthly repayments.

What If You Can’t Repay the Total?

Some taxpayers might have the chance to repay only part of the money they owe the IRS. An offer in compromise (OIC), for instance, allows you to make repayments based on your income, your ability to pay, your expenses and assets, and any other circumstances that could affect your ability to make regular repayments. If you are genuinely unable to repay the total within a specified time frame, the IRS might accept an OIC. Those applying for an OIC will need to pay an application fee of $186 and a lump sum repayment of 20% of the debt owed.

If you meet low income certification criteria, you can suggest a repayment plan that takes into account your circumstances. If this includes an OIC, then you will not be required to pay the application fee or the initial lump sum payment.

Owing money to the IRS need not be a source of stress, so long as you are proactive about resolving your situation. If you’re honest about your income and expenditures, you can clear your debts and avoid paying more than necessary by using the systems in place to help.