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IRS FRESH START INITIATIVE

Going into debt is problematic and frustrating. When you owe money to the government that you can't quickly pay back, it can be even more stressful. However, due to the growing number of taxpayers struggling in the current economic condition, the IRS has decided to help out with the Fresh Start Initiative. If you're in debt to the IRS, you may be in luck with this new advantage.

Tax liens are placed on your property if over $10,000 in back taxes are owed to the government. A lien represents your right to keep current or future property until your debt is repaid. This can also dramatically affect your credit, as the IRS will claim priority on your debt and let your other creditors know. Those with poor credit will find it extremely difficult to get out of debt.

The liens portion of the Fresh Start Initiative is one of the most important aspects of the plan. Two changes were made to the lien withdrawal process. The first is that liens will be withdrawn as soon as full payment of your taxes are made if you request it. The second is that entering into Direct Debit Installment Agreements will release your debt. To enter into the agreement, your debt must not exceed $25,000, you must agree to pay the amount owed within five years, you must settle three consecutive direct debit payments, and you cannot have defaulted on previous debit installment agreements.

Installment agreements allow you to pay your taxes owed over a specified period of time. The original qualifications for installment agreements mandated that small businesses were only $10,000 or less in debt to the IRS. With the Fresh Start Initiative, small businesses can now owe up to $25,000 and still qualify. Enterprises, either filing as an individual or business, get up to two years to pay off their debt.

Offer in Compromises are agreements between taxpayers and the IRS that can allow the taxpayer to pay less than the total amount of debt owed in order to clear their liabilities. The IRS decides if the taxpayer has the ability to pay off the debt based on the taxpayer's assets and liabilities. The Fresh Start Initiative streamlines this process by minimizing the amount of information requests needed and making the turnaround time in the decision process faster. If you make less than $100,000 in annual income and owe less than $50,000, you may be eligible.

The Fresh Start Initiative offers you a chance to get some – if not all – of the financial burden off your back. No matter what you owe, paying off just some of your debts is a step in the right direction.


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