If you are feeling the pinch when it comes to taxes, the IRS is going to do more for those who are financially strapped and unable to clear tax debts.
When the Fresh Start initiative started in 2008, the IRS announced that it would provide taxpayers with lien relief if they are were trying to sell or refinance a property. New flexibility was added in 2009, along with expanded thresholds for small business owners.
In January of 2012, the IRS agreed to a tax installment agreement that would allow taxpayers to set up payment arrangements with the taxpayers who have had to provide a large amount of financial information to the IRS in the past.
The federal government is also allowing taxpayers to pay back their student loans including delinquent local and state taxes under the most recent phase of the Fresh Start initiative.
The IRS is also revising the way it calculates the future income of taxpayers and is expanding the amount of living expense allowances.
The Fresh Start was put into place to assist individuals who have faced extreme financial hardship. An OIC allows tax liabilities for less than the amount owed. The IRS will look at the income of the taxpayer to determine the reasonable potential for collection. An OIC is usually not accepted if the Internal Revenue Service believes that the debt can be paid back through payment arrangements or a lump sum.
When it comes to calculating a reasonable collection from the taxpayer, the IRS will look at one year of potential future income instead of the previous 4 years, if the tax debt is paid in 5 months or less. All accepted offers must be paid in full within 24 months.
The IRS understands that many individual taxpayers are finding it tough to pay their bills and have been making changes to the Fresh Start program that relate to real life situations. The new National Standard includes a miscellaneous allowance that taxpayers can use for bank fees and credit card payments.
Because of the changes, some taxpayers will be able to resolve their tax issues in as little as two years, as opposed to the five or six that it took in the past.
**Bryson Law Firm, LLC is a Louisiana law firm focusing 100% of our practice on helping people and businesses solve their IRS and Louisiana state tax problems. We have offices throughout the state in Lafayette, Baton Rouge, and Shreveport**
