The IRS Fresh Start Program is legitimate. It is not a single application or a special deal, but a set of policy changes the IRS rolled out in 2011 and 2012 that expanded access to installment agreements, loosened the rules for settling tax debt for less than the full balance, and raised the dollar threshold at which the IRS files a lien against your property.1Internal Revenue Service. IR-2011-020 Every one of the relief options that came out of Fresh Start is available directly through the IRS, for a modest fee, without hiring a third party.
Why You See It Advertised Everywhere
Private tax resolution firms market “the Fresh Start Program” heavily, and some imply they have special access to a government relief channel. They do not. The IRS itself warns that “some companies appear to be the IRS or offer to help you settle tax debt through the Fresh Start program” and encourages taxpayers to resolve their debt on their own. The agency has updated its website to note that the Offer in Compromise “used to be called the Fresh Start program,” a signal that the branding has drifted while the underlying options have not changed.2Internal Revenue Service. Get Help With Tax Debt
A qualified enrolled agent, CPA, or tax attorney can help you prepare a strong application, especially for complex cases. But you are never required to hire one. If a company tells you it has special access to a program you can’t reach yourself, that is a red flag.
Payment Plans (Installment Agreements)
The most widely used Fresh Start tool is the installment agreement, which lets you pay your balance in monthly amounts instead of all at once. Federal law authorizes the IRS to enter these written plans whenever doing so helps collect the debt.3Office of the Law Revision Counsel. 26 USC 6159 – Agreements for Payment of Tax Liability in Installments The rules shift based on how much you owe.
Owe $10,000 or Less
If you owe $10,000 or less in tax (not counting interest and penalties) and have filed all required returns, the IRS is required by law to accept your installment agreement.3Office of the Law Revision Counsel. 26 USC 6159 – Agreements for Payment of Tax Liability in Installments No detailed financial statement is needed.
Owe Up to $50,000
For balances up to $50,000 in combined tax, penalties, and interest, the IRS offers a streamlined installment agreement. You can apply online, and full financial disclosure is not required.4Internal Revenue Service. Payment Plans; Installment Agreements This is the $50,000 ceiling most people associate with Fresh Start. If your balance exceeds $25,000, the IRS requires automatic bank withdrawals (a Direct Debit Installment Agreement) as a condition of approval.5Internal Revenue Service. IRM 5.14.1 – Securing Installment Agreements
Owe More Than $50,000, or Can’t Afford to Pay in Full
A partial payment installment agreement lets you make smaller monthly payments even if they won’t cover the full balance before the collection deadline expires. This version does require a full financial statement with supporting documentation, and the IRS will periodically review your finances and can adjust your payment if your situation changes.6Internal Revenue Service. Instructions for Form 9465
A useful bonus: while an installment agreement is active, the failure-to-pay penalty drops from 0.5% to 0.25% per month for taxpayers who filed on time. Over a multi-year plan, that adds up.7Internal Revenue Service. IRM 20.1.2 – Failure to File/Failure to Pay Penalties
Settling for Less: Offer in Compromise
An Offer in Compromise lets you settle your tax debt for less than the full amount. This is the option tax relief companies advertise most, and it is also the hardest to qualify for. The IRS will accept your offer only if it represents the most the agency can reasonably expect to collect from you, based on your income, expenses, and assets.8Office of the Law Revision Counsel. 26 USC 7122 – Compromises
The agency calls this “reasonable collection potential.” The formula is your asset equity plus your projected future income over a set period, minus allowances for basic living expenses. If the math shows you can pay more than what you are offering, the IRS will reject it. Before you invest time in a full application, run your numbers through the free IRS Offer in Compromise Pre-Qualifier tool.9Internal Revenue Service. Offer in Compromise Pre-Qualifier
You cannot submit an offer without money attached. A lump-sum offer (five or fewer payments) requires 20% of the proposed amount upfront. A periodic payment offer (six or more installments) requires the first proposed monthly payment, and you must keep making those payments while the IRS reviews the offer. Low-income taxpayers whose adjusted gross income is at or below 250% of the federal poverty level are exempt from both the upfront payment and the $205 application fee.8Office of the Law Revision Counsel. 26 USC 7122 – Compromises
One threshold requirement stops most applications before they start: you must have filed all required tax returns and made all required estimated tax payments for the current year. If you are behind on filings, fix that first.10Internal Revenue Service. Offer in Compromise
Getting a Tax Lien Withdrawn
When you owe back taxes, the IRS has a legal claim against your property called a federal tax lien. Once the agency files a public notice of that lien, it makes it harder to sell property, get a mortgage, or open business credit. Fresh Start raised the balance at which the IRS files that public notice and made it easier to get the notice withdrawn once you start paying.
If you enter a Direct Debit Installment Agreement, you can request that the IRS withdraw a previously filed lien notice. The requirements: your total unpaid balance must be $25,000 or less, the agreement must fully pay the debt within 60 months (or before the collection deadline, whichever comes first), and you must have made at least three consecutive on-time payments.11Internal Revenue Service. IRM 5.17.2 – Federal Tax Liens Once the notice is withdrawn, you can ask the IRS to notify credit reporting agencies and any financial institution you specify.
If You Can’t Pay Anything: Currently Not Collectible
If paying anything toward your tax debt would push you below basic living expenses, the IRS can place your account in Currently Not Collectible (CNC) status. This is not forgiveness. Interest and penalties keep accruing, and the IRS can still file a lien if you owe $10,000 or more. But active collection stops. The IRS must release any wage levy already in place and will not issue new levies while the hardship designation holds.12Internal Revenue Service. IRM 5.16.1 – Currently Not Collectible
The IRS reviews these accounts periodically and can reactivate collection if your income rises or you acquire assets. Federal law also gives the IRS only 10 years from the date a tax is assessed to collect it, so some taxpayers in CNC status eventually see the debt expire.13Office of the Law Revision Counsel. 26 USC 6502 – Collection After Assessment
Removing a Penalty: First-Time Abatement
If you have a clean compliance history, the IRS may remove failure-to-file or failure-to-pay penalties entirely under what it calls First Time Abate relief. To qualify, you must have filed all required returns for the three tax years before the penalty year and must not have received any penalties (or had them removed for a reason other than First Time Abate) during that period.14Internal Revenue Service. Administrative Penalty Relief Many taxpayers with a one-time penalty after an unusual year don’t realize they can call the IRS and request removal over the phone.
What It Costs and How to Apply
Setting up a payment plan with the IRS is not free, but the fees are modest compared to what tax relief companies charge. Short-term plans of 180 days or less have no setup fee. For long-term installment agreements, fees depend on how you apply and how you pay:
- Direct debit, applied online: $22
- Direct debit, applied by phone or mail: $107
- Other payment methods, applied online: $69
- Other payment methods, applied by phone or mail: $178
Low-income taxpayers pay nothing for direct debit agreements and $43 for other payment methods, with a possible reimbursement.4Internal Revenue Service. Payment Plans; Installment Agreements
The Offer in Compromise application fee is $205 and nonrefundable, and you must include either 20% of a lump-sum offer or the first installment of a periodic payment offer. Low-income taxpayers at or below 250% of the federal poverty level pay no application fee and are exempt from the initial payment requirement.10Internal Revenue Service. Offer in Compromise
For installment agreements, the fastest route is the IRS Online Payment Agreement tool. Create an IRS online account, enter your information, and straightforward cases receive an immediate decision.15Internal Revenue Service. Online Payment Agreement Application Offers in Compromise can be filed online through your Individual Online Account or mailed to the appropriate IRS processing center.10Internal Revenue Service. Offer in Compromise Simple installment agreements often see approval within 30 to 60 days. Offers in Compromise routinely take six months to a year.
One protection worth knowing: while an installment agreement application or Offer in Compromise is pending, the IRS cannot levy your wages, bank accounts, or other property. If the IRS rejects your application, the levy ban continues for 30 more days, and filing an appeal within that window extends it through the appeal.16Office of the Law Revision Counsel. 26 USC 6331 – Levy and Distraint
Staying Compliant After You’re Approved
Approval is only half the battle. Defaulting can leave you worse off than before.
If you miss an installment agreement payment, the IRS sends a default notice (typically CP 523) giving you 30 days to catch up. If you don’t respond, the agreement terminates. The IRS can then file a federal tax lien if one wasn’t already in place, begin issuing levies against your wages and bank accounts, and revert your failure-to-pay penalty back to the standard 0.5% per month.17Internal Revenue Service. IRM 5.14.11 – Defaulted Installment Agreements
After the IRS accepts an Offer in Compromise, you must stay in full compliance with all filing and payment requirements for five years. File every return on time, pay every tax bill in full. If you fall behind during that five-year window, the IRS can declare the offer in default, reinstate the original debt (minus any payments you made under the offer), and resume full collection with all penalties and interest added back.18Internal Revenue Service. Offer in Compromise – Frequently Asked Questions Any new tax debt you incur during this period must be paid in full separately; it cannot be rolled into the existing offer.