IRS Expands “Fresh Start” Initiative for Tax Relief
Overview of the Fresh Start Initiative
Taxpayers struggling to pay their taxes may find relief through the IRS’s expanded “Fresh Start” initiative, a program originally launched in 2008. The new provisions under the Fresh Start initiative offer penalty relief to the unemployed and extend installment agreement options to a broader range of taxpayers.
Penalty Relief Details
Typically, a failure-to-pay penalty of one-half percent per month is charged on overdue taxes, accumulating up to a maximum of 25%. Under the “Fresh Start Penalty Relief” initiative, eligible taxpayers are granted a six-month extension to fully pay their 2011 taxes. This extension allows taxpayers until October 15, 2012, to settle their tax obligations before the penalty starts accruing. However, interest at a rate of 3% will still be assessed beginning April 17, 2012.
Eligibility for Penalty Relief
The penalty relief is available to individuals who were unemployed for at least 30 consecutive days during 2011 or 2012. Additionally, self-employed individuals who faced a 25% or larger reduction in business income in 2011 due to economic conditions may qualify. Income limits apply: relief is not available to single taxpayers with an adjusted gross income exceeding $100,000 or to couples with an income over $200,000. Furthermore, the taxes owed must not exceed $50,000.
Changes to Installment Agreements
The program also modifies the eligibility criteria for streamlined installment agreements. The threshold for eligibility has been raised from $25,000 to $50,000, and the maximum term for these agreements has been extended from five to six years.
Contact Us for Assistance
For more information or assistance with the Fresh Start initiative, please contact our office. We are here to help you navigate these new relief options and manage your tax obligations effectively.