How the IRS Fresh Start Program Began
The IRS launched Fresh Start in 2011 and expanded it in 2012 to help struggling taxpayers who owe.
The 2011 round opened offers in compromise to more struggling taxpayers and added two lien withdrawal options. The 2012 expansion raised the streamlined installment agreement threshold from $25,000 to $50,000. An installment agreement is a payment plan that lets you pay the IRS over time, and the streamlined version needs limited financial information.
Fresh Start Relief Options Compared
| Option | Key requirements |
|---|---|
| Long-term payment plan (installment agreement) | Owe $50,000 or less in combined tax, penalties and interest, and have filed all required returns |
| Short-term payment plan | Owe less than $100,000 and pay in 180 days or less, with a $0 setup fee |
| Offer in compromise | Pay a $205 fee and a first payment unless you meet low-income qualifications |
| Lien withdrawal | Meet one of two Fresh Start withdrawal options and file Form 12277 |
How to Apply for Each Option
Payment Plans
If you meet the requirements in the table, you can apply online for a long-term payment plan. Learn how an IRS installment agreement works before you apply. Afterward, you can change your plan in your IRS Online Account or convert it to Direct Debit (automatic payments from your bank account).
Offer in Compromise
An offer in compromise lets you settle your tax debt for less than the full amount. You generally won’t qualify if a payment plan could cover your full balance. Learn how an offer in compromise works before you decide.
Every offer in compromise application requires a $205 fee and a first payment, unless you meet the low-income qualifications for individuals. You can pay in one of two ways:
- With a lump sum offer, you pay 20% upfront and the rest in five or fewer payments if accepted.
- With a periodic offer, you make an initial payment and keep paying during the IRS review.
Most collection stops during review, though the IRS may file a lien notice. The Offer in Compromise Booklet (Form 656-B) has the forms and instructions.
Tax Lien Withdrawal
A federal tax lien is the government’s legal claim against your property for unpaid tax. Fresh Start added two ways to withdraw a federal lien, and you request either one with Form 12277. The first applies after your lien is released, if you’ve been in filing compliance for the past three years and are current on estimated payments.
The second applies if you’re in (or convert to) a Direct Debit installment agreement and meet all of these conditions:
- You owe $25,000 or less, or pay your balance down to that amount.
- Your plan pays in full within 60 months or before the IRS collection deadline, whichever comes first.
- You’ve made three consecutive direct debit payments.
- You haven’t defaulted on the plan.
Be Careful With Companies Promising Fresh Start Access
Fresh Start has no application, so there’s nothing for a company to enroll you in. Some companies still advertise special IRS access, so learn how to spot legitimate tax debt relief before you pay anyone.
If penalties are increasing the balance you owe, the IRS is replacing first-time abatement with automatic penalty relief for taxpayers with a clean recent filing and payment history. You don’t need to apply for it. If you don’t qualify, you can still ask the IRS about penalty relief for reasonable cause.
