Describes the new IRS program which relaxes the traditional requirements for Installment Plans and Offers-in-Compromise, offering taxpayers an unprecedented chance to settle their tax debt for more modest payments or lump sum settlements and allows taxpayers to get a "fresh start."
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"Streamlined" or "No Document" Installment Agreements
If you have a tax debt, this is the best time in years to work out a deal. Starting on Feb. 24, 2011, the IRS has rolled out a series of “Fresh Start” programs to help struggling taxpayers. The “Fresh Start” Program is important for small businesses and individual taxpayers. Overview of the Program: (1) “Streamlined” or “No Document” Installment Agreements for taxpayers owing $50,000 or less; (2) Increases limit to qualify from $25K to $50K; (3) Extends payment options from 60 to 72 months. Plan Requirements: (1) Requires Direct Debit payments; (2) Example: You owe $40,000 in back taxes. After you take into account your mortgage, food expense, vehicle expense, and other basic living expenses, you have $2,000 left over each month. The IRS will take a payment plan of $556/mo, no questions asked.
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Offer-in-Compromise Relief
For taxpayers who will make a lump sum payment to resolve their tax liability, the IRS has provided a once-in-a-lifetime opportunity. (1) An “Offer” is based on the sum of the value of your “liquid assets” and your “discretionary income” for a number of months; (2) Offers calculated based on your discretionary income for 12 months, instead of 48; (3) Offers will allow: (a) greater flexibility in expenses the IRS accepts; (b) businesses can exclude “income-producing assets” so they can continue operations; (c) expenses for payment of certain government backed student loans may be counted; (d) taxpayers can keep some of what is in the bank for personal needs; and (e) allows a credit for state tax debts.
