IRS Offers a “Fresh Start” to Delinquent Taxpayers in Financial Straits

For the past few years, the IRS has increasingly taken the state of the economy into account when calculating how much it can collect from delinquent taxpayers. The latest iteration of the IRS “Fresh Start” program was announced in May 2012, and is designed to give taxpayers more flexibility when making an Offer in Compromise to resolve their tax debt.

The Fresh Start Program Is Meant to Help, not Punish, Taxpayers

Ever since the housing market collapsed in 2008, precipitating a market crash that wiped trillions of dollars-worth of equity off the nation's balance sheets, the IRS has had no choice but to adjust its policies to reflect the new economic reality. Even today, five years after the crash, many Oklahoma citizens still have difficulty making ends meet. These are the people the IRS intends to help with its Fresh Start program, which includes the following provisions:

  • Allowing taxpayers to repay their student loans as well as delinquent state and local taxes (previously, these obligations wouldn't necessarily have been included by the IRS when calculating the terms of an Offer in Compromise)
  • Reducing future income calculations to one year of prospective income for taxpayers who agree to pay off their OIC in no more than five months (compared to four years before the change) and two years for OICs paid in six months to two years (compared to five years before the change)
  • Revising taxpayers' allowable living expenses to include credit-card payments and bank fees and charges (that is, the IRS will be more lenient in its OIC terms if your monthly budget includes these items).

Despite the friendly face of the IRS' Fresh Start initiative, it's important to remember that the government is interested, first and foremost, in collecting its tax debt. All you and your lawyer can do is make an Offer in Compromise; it's up to the IRS revenue officer to decide whether your financial circumstances are such that you can't be expected to pay your tax debt in full.

Only an Experienced Oklahoma Tax Lawyer Should Handle an Offer in Compromise

There's nothing the IRS would like better than to have taxpayers deal with it directly under the terms of the Fresh Start program, rather than bringing a lawyer into the fray. Even with the Fresh Start program, though, it's important to retain the services of a knowledgeable tax attorney who can secure you the best terms with the federal government. Call the Oklahoma tax experts at Travis W. Watkins, PC (800-721-7054) for a free consultation today!