Struggling taxpayers can now breathe a large sigh of relief; the Internal Revenue Service is expanding its “Fresh Start” initiative to enable some of the most financially distressed taxpayers to clear up their tax problems in as little as two years, as compared to four or five years in the past.
This expansion focuses on the Offer in Compromise (OIC) program, an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Taxpayers will not qualify for an OIC if the IRS believes the liability can be paid in full as a lump sum or a through payment agreement based on the taxpayer’s income and assets. OICs are subject to acceptance on legal requirements.
In certain circumstances, the expansion includes:
- Revising the calculation for the taxpayer’s future income.
- Allowing taxpayers to repay their student loans.
- Allowing taxpayers to pay state and local delinquent taxes.
- Expanding the Allowable Living Expense allowance category and amount.
