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The Fresh Start Initiative, introduced by the Internal Revenue Service (IRS) in 2012, enables qualified individuals an extension on paying overdue taxes. Typically, those enrolled in the program are unemployed or face other challenging financial circumstances. If approved for the program, you can request an additional six months to pay your tax debt without penalty.

You must pay your overdue taxes by October 15 in the year that the IRS approved you for the program or you will face additional penalties. The benefit of the Fresh Start Initiative is that it provides people owing past-due taxes with an alternative installment structure. This makes it possible to avoid additional reviews by the IRS and new tax liens.

Do You Qualify for the Program?

Before you can apply for the Fresh Start Initiative, you must have faced unemployment for at least 30 days in the last full tax year or before the tax cut-off date of April 15 of the present year. You can’t earn more than $100,000 as a single taxpayer or $200,000 for a married couple filing a joint return. Additionally, your outstanding tax debt must not exceed $50,000 including penalties. To prove eligibility if you’re self-employed, you need to show documented proof that your income has decreased by 25 percent or more from the last full tax year.

If you feel that you meet these qualifications, you can download IRS Form 1127-A called Extension of Time for Payment of Income Tax Due to Undue Hardship. The form asks you to explain in one paragraph your reason for applying to the program. You must also include supporting documentation such as an itemized list of expenses and income for the past three months and a statement of assets and liabilities as of the last day of last month.

We invite you to get professional guidance before applying for a tax relief program. Just contact us at Roberts Tax Planning to schedule an appointment.