This IRS Fresh Start program gives a lot of delinquent taxpayers a chance to get back on their feet financially.
RELATED: What To Do When You Receive A Notice Of Deficiency From The IRS
In this article:
- What Is the IRS Fresh Start Program?
- Who Can Apply for Eligibility on the Fresh Start Initiative IRS Program?
- When Can a Business Apply for the IRS Installment Agreement?
- Where Should the Business Taxpayer Send the Necessary Paperwork?
- How Can a Taxpayer, Specifically a Business, Apply?
Fresh Start IRS Program: What a Taxpayer May Want to Know
What Is the IRS Fresh Start Program?
The IRS Fresh Start program gives a taxpayer the chance to pay off tax debt within a period of time, usually in a span of 6 years.
The longer payment schedule is not the only thing to celebrate. The Fresh Start program also includes assistance for:
- The suspension and postponement of late fees and penalties;
- Halting the application of the IRS for other tax collection methods like a tax lien or tax levy;
- Burdensome IRS processes like wage garnishment;
- Interest for tax debts; and
- Other processes wherein the IRS takes assets to pay for back taxes.
All these benefits and more can apply to both businesses and individual taxpayers.
How does this apply for businesses?
A business owner may be eligible for the IRS Fresh Start program due to:
- Late payment of payroll taxes,
- Assistance during difficulties with estimated taxes,
- Financial hardship due to excise taxes and other fees necessary for operations.
However, more often than not, a business owner applies for the program due to payroll taxes.
Payroll taxes include FICA contributions, specifically Social Security and Medicare.
Payroll taxes are definitely not cheap. Total contributions are 7.45%, with Social Security at 6.2% and Medicare at 1.45%.
To reiterate, the Fresh Start Program is not one tax relief option. Instead, the program aims to give taxpayers literally a fresh start with their tax standing. Sometimes, the IRS forgives all penalties and fees, foregoes the tax debt interest, and allows a monthly installment so that a taxpayer can give his or her tax dues.
Who Can Apply for Eligibility on the Fresh Start Initiative IRS Program?
For clarification, whatever tax relief option a taxpayer opts for, like an installment plan or an offer in compromise, carries with it differing forms and requirements.
By itself, the IRS Fresh Start program does not have any qualifications. The program is simply an umbrella term for all tax relief options available for deserving taxpayers who need assistance in getting back on track financially.
For business owners, specifically for the tax relief for payroll taxes aptly named as In-Business Trust Fund Express Installment Agreement, the qualifications are as follows:
- Tax debt lies between $10,000 to $25,000.
- Reason for delinquency relates to payroll taxes,
- Legally qualified as an employer (each state’s qualification rules may vary). However, a previous tax return showing employment of workers to prove employer status can serve as proof.
More often than not, the IRS only gives 24 months for the installment payment plan, especially for payroll taxes since it is imperative these benefits are funded. However, a business owner can try to persuade the IRS to allow the longest period, which is 6 years or 72 months.
Of course, taxpayers who did not qualify for the IRS Fresh Start program do not need to worry. There are other tax relief options available, like a Currently Not Collectible Status or an Offer In Compromise.
A taxpayer can hire a tax preparer or tax advocate for assistance. Employing them for their expertise is not the only reason why a business owner should hire one.
These tax preparation fees can actually apply as a tax-deductible expense, which can provide a business owner not only direct tax savings but also lesser work, time, and resources spent on paying off tax debts.
When Can a Business Apply for the IRS Installment Agreement?
The great news for business owners: They can apply whenever they want as long as they want. However, the IRS prefers coordinating with taxpayers who are current with their tax returns.
For example, let us say that the business owner is current for Tax Year 2017 and petitioned for tax relief before April 15, 2019 (deadline for Tax Year 2018 tax return). The IRS may give more leniency, as the taxpayer is current with his or her tax returns.
Unfortunately, some business owners may not know that they can apply for the Fresh Start program until after they’ve filed their tax returns.
Remember, the qualifications and forms requested by the IRS depend on what tax relief option the taxpayer applies for.
As a recommendation, a taxpayer should file for tax relief before the busy tax season, which can start as early as November.
RELATED: IRS Penalty Calculator: Breaking Down Your IRS Late Fees [INFOGRAPHIC]
Where Should the Business Taxpayer Send the Necessary Paperwork?
Again, the IRS Fresh Start program by itself does not have any official form. However, the tax relief option chosen requires the taxpayer to file the needed form.
For added convenience, a taxpayer can also apply for the payment online. The IRS has the online installment plan application web portal to help taxpayers easily fulfill their monthly payments.
The general IRS form, Form 9465, Application for IRS Installment Plan, is what most taxpayers use.
Lastly, for the taxpayers who prefer to mail the forms, the address can be found in the last portion of the forms.
If more information is required, a taxpayer can call 800-829-4933.
Another option is to reach out to the IRS Revenue Personnel assigned to the case. A taxpayer can ask for the contact information of their revenue officer upon the start of any tax relief option process.
How Can a Taxpayer, Specifically a Business, Apply?
For the business owner who did not successfully apply for the payroll Fresh Start program, all is not lost. The business owner can still file Form 433-B, CIS for Businesses to send more information to the IRS.
Once the business owner has sent the form, the taxpayer can negotiate with the IRS. There are other tax relief options available, like an Offer in Compromise.
A taxpayer can always contact the IRS for a more in-depth discussion specific to their case about the possible tax relief options available.
The IRS Fresh Start program can help any business owner delinquent on his or her taxes. The most common issue lies with paying payroll taxes, but other business taxes may also be the reason for the IRS Fresh Start application.
Have you gone through the program application? What are your thoughts about the IRS Fresh Start Program? Share your thoughts in the comments section below.
If you owe back taxes, visit taxreliefcenter.org for more information on tax relief options.
Let Us Know What You Think