What the Fresh Start Program Actually Is
The IRS Fresh Start Program is not a single program. It is a set of changes the IRS made to existing collection procedures to make it easier for taxpayers to resolve their debts. If you have seen TV commercials promising that the government has a new program to settle your taxes for pennies on the dollar, they are talking about Fresh Start. And they are exaggerating.
What Fresh Start Changed
Fresh Start made four significant changes. The lien filing threshold increased from $5,000 to $10,000. Streamlined installment agreements expanded from $25,000 to $50,000. The offer in compromise formula was modified to use a shorter future income multiplier. And the IRS expanded access to installment agreements for small businesses with payroll tax debt.
These are meaningful improvements. But they are not magic. You still need to qualify based on your financial situation. The IRS still applies the same formulas and standards. Fresh Start just widened the eligibility criteria.
The Marketing Problem
The tax resolution industry has used Fresh Start as a marketing tool to sell services to people who may not qualify. I have had clients come to me after paying another firm thousands of dollars for a Fresh Start resolution that went nowhere because they never qualified in the first place.
Here is the truth. Fresh Start did not create any new programs. It modified existing ones. If you qualified for an installment agreement or offer in compromise before Fresh Start, you still qualify. If you did not qualify before, Fresh Start might have expanded the criteria enough to include you. But only a proper financial analysis can determine that.
What You Should Do Instead
Forget the marketing. Focus on the fundamentals. Get your returns filed. Pull your IRS transcripts. Calculate your total liability including penalties and interest. Determine your reasonable collection potential. Then compare your options: installment agreement, partial pay agreement, offer in compromise, currently not collectible, or bankruptcy. A tax attorney runs these numbers and tells you which option gives you the best result.