Who Qualifies for the Fresh Start Tax Program?


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Despite your best intentions, you may need to push the proverbial Restart button with your connection with the IRS. Inadvertent errors, failure or inability to pay, or failure to submit your returns on time can jeopardize your taxpaying compliance and put at risk of fines and penalties.

Rather than ignore your tax issues or rely on outdated information about settling your debt, you may prefer to use an option that would correctly and quickly satisfy your taxpaying non-compliance. You can get the help that you need by learning if you qualify for the IRS Fresh Start program.

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What is the Fresh Start Program?

The IRS Fresh Start program is designed to help taxpayers repay their tax debts without incurring financial difficulties. Without this program, they may face consequences that include:

  • garnishments
  • liens
  • bankruptcy
  • repossessions
Fresh Start is not itself a brand new program but rather an extension of existing tax debt relief programs. If you qualify for it, your fresh start is applied in conjunction with one of the repayment or settlement options like:

  • penalty abatement
  • installment agreement
  • Offer in Compromise, or OIC
  • lien release
  • garnishment release
  • business or payroll tax relief
To find out if you meet the qualifications for the Fresh Start program or to request participation in it, you must fill out and submit IRS Form 1127A. This form can be found on IRS.gov but cannot be submitted electronically. You must send it to the IRS by mail.

How to Qualify for the Fresh Start Program

What are the qualifications for the IRS Fresh Start program? The IRS has established specific criteria that must be met before you are allowed to utilize this program. The first qualification involves being unemployed for 30 consecutive days in 2011 or before April 15, 2012.

If you are married and file a joint return, you or your spouse must meet at least one of the qualifications as well. This courtesy comes in handy if both of you do not satisfy the criteria. The IRS allows a couple's participation in the program as long as one spouse can satisfy at least one of the qualifications.

People who are self-employed also are allowed to participate. In order for self-employed individuals to take part in the program, they must have experienced a drop in net income of at least 25 percent.

Finally, you can ask for inclusion the program if you are married and you and your spouse earned $200,000 or less. If you are single, you must have earned $100,000 or less. Likewise, your tax debt by the end of 2011 must have been less than $50,000.

How can you take part in the program? As mentioned, you must fill out IRS Form 1127A, which can be found on the IRS' website. You must mail it in because you cannot submit it electronically.

Second, you should hire a tax professional to help you submit the necessary proof of income, assets, and other documentation that might be requested by the IRS. After you submit the documents and are approved for the Fresh Start program, it is essential that you comply with the requirements by filing your taxes and making payments on time. If you violate the terms of the Fresh Start program, you could be dismissed from it and face paying your full debt plus any penalties and interests.

The IRS gives you a second opportunity to get back into taxpaying compliance. Instead of having your income garnished, your assets seized, or face filing bankruptcy, you can settle your account and avoid financial difficulties related to your tax debt by taking part in the IRS Fresh Start program.

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