Tax Tip of the Week- IRS Introduces Fresh Start for Back Taxes

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IrsThe IRS has created a new program for people who owe back taxes. There are several changes that may help you if you owe the IRS money.

The first part of the Fresh Start program pertains to taxpayers that owe for tax year 2011. If you were unemployed for 30 days or more between 2011 and April 17, 2012, the IRS will waive their late payment penalty for 6 months. You will need to file Form 1127-A to apply for the waiver. If you decide to do this, you will have to pay the full amount plus interest and any other penalties you may have accrued by Oct. 15, 2012. There are some income exclusions and caps on this waiver.

The second part to the Fresh Start program is related to the installment agreements. Before, if you owed $25,000 or less to the IRS, you would automatically be approved for a payment plan and you were not required to provide your financial information to the IRS for approval. They have increased the debt amount to $50,000. This is the only part that changed when asking for an installment agreement. You will still pay for an installment agreement fee, if not done online, and interest and penalties still apply.

If you would like to learn more about this, click on this link to learn more.

Like any good CPA, I need to add a disclaimer: Unfortunately, it is impossible to offer comprehensive tax info over the internet, no matter how well researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: before relying on any information given on this site, contact a tax professional to discuss your particular situation.