The IRS Fresh Start program explained
You have heard on the radio and seen on TV advertisements for what the spokesperson usually calls the Fresh Start Program, Fresh Start Initiative, or Debt Forgiveness Program. We feel compelled to educate the public about what this program is, and more importantly, what the IRS Fresh Start is not, because we hear unlicensed tax consultants at many tax relief companies often tell people they qualify for big savings (debt forgiveness, whatever that is) on taxes, penalties, and interest to the IRS. This is a big red flag. Some people can, but most people will not get a big fat gift from IRS HQ in Washington, DC.
“IRS Fresh Start,” the official name given by the IRS
The IRS Fresh Start program was designed to allow those who owe taxes to pay their taxes and avoid a tax lien in the process. Here are the key features of the IRS Fresh Start:
- The IRS raised the limit of what you can owe before they file a tax lien
- The IRS raised the limit of how much you can owe and be eligible, without submitting a full financial statement, to the IRS for a 6-year payback of all your taxes. There is no reduction in taxes or interest, just an easier path to getting a formal payment arrangement and thus avoiding liens and seizures.
- Expanding the Offer in Compromise (reduced settlement, pennies on the dollar, forgiveness) to include extra considerations for the following:
- 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.
How do Allowable Living Expenses work?
The IRS has allowable expenses based on the number of people in the household and by county. County to county differences across the United States vary by a factor of over three. This is because income levels vary so much county to county and even state to state.
Below is a table of just the differences in average incomes by state, for 2014, the last year the IRS published the data.
| State | Individual Tax Returns Filed |
Total Adjusted Gross Income |
Average AGI | |
| Alabama | 2,046,560 | $107,936,740,000 | $52,741 | |
| Alaska | 361,130 | $24,272,390,000 | $67,212 | |
| Arizona | 2,845,710 | $161,928,643,000 | $56,903 | |
| Arkansas | 1,223,140 | $65,054,335,000 | $53,186 | |
| California | 17,411,400 | $1,287,368,304,000 | $73,938 | |
| Colorado | 2,553,250 | $179,600,634,000 | $70,342 | |
| Connecticut | 1,749,470 | $164,110,851,000 | $93,806 | |
| Delaware | 443,820 | $27,516,019,000 | $61,998 | |
| Washington DC | 336,950 | $29,796,594,000 | $88,430 | |
| Florida | 9,398,920 | $570,292,720,000 | $60,676 | |
| Georgia | 4,378,120 | $253,487,684,000 | $57,899 | |
| Hawaii | 681,840 | $39,689,089,000 | $58,209 | |
| Idaho | 701,990 | $36,997,279,000 | $52,703 | |
| Illinois | 6,131,110 | $424,188,653,000 | $69,186 | |
| Indiana | 3,078,750 | $166,637,525,000 | $54,125 | |
| Iowa | 1,445,570 | $86,096,947,000 | $59,559 | |
| Kansas | 1,336,440 | $83,259,525,000 | $62,299 | |
| Kentucky | 1,891,820 | $98,331,729,000 | $51,977 | |
| Louisiana | 2,007,830 | $115,571,432,000 | $57,560 | |
| Maine | 638,280 | $34,159,794,000 | $53,519 | |
| Maryland | 2,935,560 | $213,549,098,000 | $72,746 | |
| Massachusetts | 3,343,720 | $285,581,083,000 | $85,408 | |
| Michigan | 4,685,320 | $266,767,393,000 | $56,937 | |
| Minnesota | 2,687,780 | $184,514,005,000 | $68,649 | |
| Mississippi | 1,243,420 | $57,992,430,000 | $46,639 | |
| Missouri | 2,767,370 | $156,727,536,000 | $56,634 | |
| Montana | 492,010 | $27,178,486,000 | $55,240 | |
| Nebraska | 889,100 | $54,867,033,000 | $61,711 | |
| Nevada | 1,321,700 | $77,642,876,000 | $58,745 | |
| New Hampshire | 685,010 | $47,606,625,000 | $69,498 | |
| New Jersey | 4,342,620 | $353,247,794,000 | $81,344 | |
| New Mexico | 911,750 | $46,264,952,000 | $50,743 | |
| New York | 9,523,840 | $754,932,479,000 | $79,268 | |
| North Carolina | 4,380,810 | $247,012,395,000 | $56,385 | |
| North Dakota | 370,570 | $27,236,634,000 | $73,499 | |
| Ohio | 5,559,950 | $313,149,940,000 | $56,322 | |
| Oklahoma | 1,639,860 | $97,488,903,000 | $59,450 | |
| Oregon | 1,826,550 | $109,310,786,000 | $59,845 | |
| Pennsylvania | 6,169,090 | $388,883,451,000 | $63,037 | |
| Rhode Island | 521,890 | $32,511,563,000 | $62,296 | |
| South Carolina | 2,124,300 | $111,386,099,000 | $52,434 | |
| South Dakota | 410,920 | $24,938,776,000 | $60,690 | |
| Tennessee | 2,928,360 | $161,050,478,000 | $54,997 | |
| Texas | 11,992,010 | $806,504,418,000 | $67,253 | |
| Ohio | 1,221,670 | $74,268,005,000 | $60,792 | |
| Vermont | 322,860 | $18,588,007,000 | $57,573 | |
| Virginia | 3,871,680 | $279,345,572,000 | $72,151 | |
| Washington | 3,342,750 | $244,055,829,000 | $73,010 | |
| West Virginia | 782,960 | $39,461,888,000 | $50,401 | |
| Wisconsin | 2,811,290 | $167,540,416,000 | $59,596 | |
| Wyoming | 279,930 | $21,658,081,000 | $77,370 | |
| National Average | 147,048,750 | $9,647,559,918,000 | 65,608 |
Conclusion
A reputable tax relief company definitely can help you with your tax problem. They can make sure you do not pay more base tax, penalties or interest than you legally owe, and often more importantly protect your income and assets from aggressive IRS (or state) collections while your tax issues are negotiated. In some instances you can pay a lot less than the government wants but before believing the hype or pitch about “IRS Programs,” it is crucial that you speak to licensed professional to assess your situation.
If you are having doubts or want to know more about the IRS Fresh Start and “Forgiveness” (the Offer in Compromise) you may read the full unedited text about the IRS Fresh Start, straight from the IRS. Boring but very important reading if you have been told you qualify for savings that you probably do not qualify for. https://besttaxreliefcompany.is/irs-fresh-start-and-fresh-start-offer-in-compromise-update-from-irs-gov
