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Fresh Start for IRS Debt

November 4th

In 2011, the IRS introduced the Fresh Start Program to help alleviate some of the burden faced by taxpayers in a troubled economy. The Fresh Start Program offers various ways to help taxpayers get some relief from their IRS debt while being able to pay back at least a portion of what they owe to the government. The biggest change is the grace period before penalty for non-payment of IRS debt.

Fresh Start

According to a tax debt lawyer, the Fresh Start grace period gives taxpayers time to avoid the penalties that would have normally been applied following a non-payment as of the due date of April 15. These penalties are applied at a rate of 0.5% per month on the total amount of the unpaid taxes, with a maximum penalty of 25% of the total owed. Under the Fresh Start initiatives, there is a six month grace period before these penalties on your IRS debt begin to kick in. According to the tax debt lawyer, this grace period allows taxpayers more leeway to get their payments in on time without accruing penalties that make it more difficult to pay the total amount due.

The grace period only applies to people who have had a drastic reduction in income over the tax year. Specifically, an individual must have been unemployed for 30 days or more in the calendar year, or had a 25% reduction in income. The Fresh Start Program also allows qualifying taxpayers to pay their IRS debt in installments. It is a versatile and useful new law for those facing IRS debt.

 
 
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