IRS Fresh Start Program Overview

IRS Fresh Start Initiative: What Is It? Can It Really Help?

The initiative is an extension of the IRS Restructuring and Reform Act of 1998. The IRS launched the Fresh Start Initiative in 2011 to help taxpayers who owe back taxes get a fresh start. Over the years, the initiative progressed with incremental changes to IRS collection procedures.

The changes include parts that help taxpayers follow federal tax rules. They also help them pay IRS taxes they owe. More importantly, the changes helped more taxpayers avoid federal tax liens and get them withdrawn.

In recent years, the IRS has made this program even more enticing. The changes are real and IRS forgiveness is a possibility for more taxpayers.

Key Takeaways

• Fresh Start Program - A series of changes the IRS made in 2011 to help taxpayers deal with tax debt more easily.
• Fresh Start Application - There's no application. Instead, figure out which IRS relief option you want and apply directly for that program.
• Is it a limited time offer? - No the Fresh Start refers to procedural changes the IRS made over 15 years ago. It's not a limited-time offer, but some tax problems need fast action.
• Is the Fresh Start still active? Some changes still apply; other programs have improved even more since the original IRS initiatives.
• How to get help - use TaxCure to find a tax professional today.

What Is the IRS Fresh Start Program?

The IRS Fresh Start Program is a collection of tax debt relief programs rolled out by the IRS in 2011. The IRS created this program to help taxpayers get out of tax debt and have a fresh start. In particular, the program made it easier to settle your tax debt through an offer in compromise.

Is The Fresh Start Initiative Legitimate?

Yes, the IRS Fresh Start Program is legitimate. The IRS created this initiative to help taxpayers get a fresh start. However, you don't apply to the IRS Fresh Start Program. There is no IRS form that says Fresh Start Application.

If you have tax debt, you can apply for a payment plan. You can also ask for an offer in compromise or use other IRS tax relief programs. The Fresh Start Initiative simply expanded the eligibility criteria for some of these programs.

Why are people still talking about the Fresh Start Program if it's more than a decade old? Big tax relief firms use this program as a marketing hook. They put ads on the radio, TV, internet, and print media about the Fresh Start Program.

People with tax debt hear the ads and search for the program online. They then find websites that sell tax debt relief services.

You can find a little bit of information about the Fresh Start Initiative on the IRS's website, but not much. Again, this program started more than 12 years ago so, the IRS isn't even really talking about it anymore.

If you call the IRS and ask about the program, the agent will say it was a bunch of changes to collection processes and the offer-in-compromise program years ago. And since those changes, the IRS has rolled out even better updates.

Who Qualifies for the IRS Fresh Start Program?

The Fresh Start qualification rules vary based on the tax relief program. For example, the rules for an installment agreement are different from the rules for an offer in compromise. To find out if you qualify, reach out to a local tax pro. They can review your tax debt and finances and help you choose the best program for you.

What Relief Did the IRS Fresh Start Initiative Provide?

The IRS Fresh Start Program offered penalty relief for taxpayers in 2011. It also made it easier to set up installment plans or get offers in compromise on tax debt. The Fresh Start Program let people with under $50,000 in tax debt to set up monthly installment payments.

But as of 2025, the IRS replaced this with the simple payment plan for individuals, giving you up to 10 years to repay. Note that a version of the streamlined agreement continues to exist for business taxpayers.

It also reduced the income amount the IRS considers if you apply for an offer in compromise to settle your tax debt for less. Since then, the IRS added an option that lets taxpayers take up to 24 months to pay their offer in compromise.

Here are the changes created through the IRS Fresh Start Program. Keep reading for more detailed discussions about these changes below.

1. New Rules for Tax Liens
2. Loosened the rules to Get Tax Liens Withdrawn
3. Changed the qualifications for certain Installment Agreements to ease the process (Monthly Payment Plans)
4. Easier to Set up Installment Agreements for Business Taxes
5. Eased the Rules to Obtain Offers in Compromise (Settling Taxes owed for Less Than You Owe)
6. Changes to Currently Not Collectible Status
7. Expanded Penalty Relief (Now expired)

IRS Fresh Start Tax Lien Changes

Before the Fresh Start Initiative, the IRS issued federal tax liens for all kinds of liability levels. Under the new rules, the IRS does not issue tax liens if the tax owed is less than $10,000. Note that there are rare exceptions to this rule.

A tax lien is a legal claim to your assets, and traditionally, it appeared on your credit report. A tax lien is like how if you owe money on a car loan, your lender has a lien on your car. If you sell the car, the lender can take the money from the sale. If the IRS issues a lien, it can take money you get from selling your assets.

When an IRS lien is on your credit report, lenders usually will not give you loans. Since 2018, the IRS no longer sends federal tax liens to credit bureaus so the lien won't appear on your credit report. However, the lien is still public, so creditors can find it.

IRS Fresh Start Program Made Lien Withdrawals Easier

Under the Fresh Start Initiative, the IRS also made it easier to get tax liens withdrawn. When the IRS removes a tax lien from the public record, it is a tax lien withdrawal.

You can get a tax lien withdrawn by paying off all your taxes and staying compliant for a certain period.

If you set up a monthly payment plan, you can have the tax lien removed after you make three payments in a row. However, you must owe less than $25,000 in tax debt and agree to a direct debit payment method.

Unfortunately, the IRS doesn’t always remember to automatically withdraw liens. You can request to have your tax lien removed using Form 12277 (Application for Withdrawal).

Fresh Start Installment Agreement for Individuals

An installment agreement, or a long-term payment plan, is where you make monthly payments on your taxes. With updates, the IRS let taxpayers who owed up to $50,000 set up streamlined installment agreements. A streamlined agreement offers a “streamlined” application process—you don’t have to provide a lot of financial details.

If you meet a few minimum criteria, the IRS approves your installment plan. As of 2025, this option is now the simple payment plan for individuals. It’s still available to businesses with certain restrictions.

How to Apply for an IRS Payment Plan

If you owe $50,000 or less including tax debt, penalties and interest, use the IRS’s online payment agreement tool. If you owe more than $50,000, apply using Form 9465 (Installment Agreement). The IRS may require you to share financial details if you owe over this threshold.

You can pay the IRS in several ways:

• Direct Pay
• Debit card
• Credit card
• Check
• Money order

To avoid missed payments and possible tax liens, the IRS recommends paying by direct debit or payroll deduction.

Setup fees vary based on:

• Your income level
• How you apply (online or by mail)
• Whether you choose direct debit

Standard fees (non–low income):

• Online application: $31 to $149

Low-income applicants:

• Online application: $43
• Fee waived if you use direct debit

Note: Paying with a debit or credit card will add extra charges.

IRS Fresh Start Installment Agreement for Businesses

The IRS is a lot stricter about business taxes than individual tax debt. If your business owes up to $25,000 in tax debt (not including payroll taxes), you can qualify for an installment agreement. Before the IRS Fresh Start changes, the limit was only $10,000.

If your business has employees and owes back payroll taxes, you may qualify for In-Business Trust Fund Express Installment Agreement. To qualify, you must:

• Still be in business
• Have employees
• be able to pay off all liabilities within 24 months or before the Collection Statute Expiration Date (CSED)

This payment plan is great for businesses that got behind in the first year or two of operations but now have enough revenue to cover payments on their taxes owed.

If your business is no longer operating, you may still qualify for a streamlined installment agreement:

• Owe up to $25,000 for payroll or other taxes
• Owe up to $50,000 if you are a sole proprietor

This plan allows repayment over 72 months.

IRS Fresh Start Offer in Compromise

An offer in compromise lets you settle your taxes for less than you owe. You make an “offer” of how much you can pay, and the IRS “compromises” by letting you pay less than you owe.

Generally, the IRS only accepts offers if it is the most money they could collect by any other method.

Example:

You owe $15,000 and are living on a fixed income with just enough to cover necessary expenses and you offer $5,000. The IRS may accept that amount if that is all you have.

What if you owe the same amount but have $20,000 in savings and extra income? The IRS will likely reject a low offer. They may require you to pay through a regular payment plan instead.

Applying and Qualifying for an Offer in Compromise

The Fresh Start Initiative made it easier than ever to get an offer in compromise (OIC). You can apply for an OIC on up to $100,000 in taxes. You can choose between a lump sum or a short-term periodic offer in compromise.

The program also changed how the IRS looks at your future income. This makes qualifying easier.

Income Calculation Changes

Before Fresh Start:

• Lump Sum OIC: IRS reviewed four years of income.
• Short-Term Periodic OIC: IRS reviewed five years of income.

After Fresh Start:

• Lump Sum OIC: IRS reviews one year of income.
• Short-Term Periodic OIC: IRS reviews two years of income.

These are some important rules to consider:

• Since March 2017, the IRS rejects your OIC if you have unfiled tax returns. They will keep your down payment and apply it to your tax debt.
• You must not be in bankruptcy or behind on current tax payments.
• The IRS OIC Pre-Qualifier Tool can help, but it is not always accurate. Work with a tax professional to check your eligibility.

How Much Will the IRS Usually Settle for?

Tax settlements vary based on the taxpayer's ability to pay. The IRS will usually only settle if it believes your settlement represents the most you can afford to pay. Tax debt settlements depend on your income and the value of your assets.

IRS Fresh Start Initiative: Currently Not Collectible Status

Currently not collectible status is when you show the IRS that you can’t pay your taxes. The IRS stops all collection activity on your account. CNC status is temporary. The IRS reviews your situation every two years by checking your tax returns to see changes to your finances.

The Fresh Start Initiative makes it easier to apply for currently not collectible status. If you owe less than $10,000 you may not need to provide as many financial documents.

Some common scenarios are listed below for people who generally qualify for currently not collectible status:

• You earn a modest income, and all your income goes to IRS-approved living expenses.
• All your income is from Social Security, welfare, or unemployment benefits.
• Your tax owed is almost ready to expire.
• You are unemployed and have no income.

To apply for currently not collectible status, see our section on the qualifying for Currently Not Collectible with the IRS.

Penalty Relief with IRS Fresh Start Initiative

The Fresh Start Initiative introduced special penalty relief for low income individuals or unemployed or a period of time.

In 2012, the IRS provided a six-month grace period on failure to file tax penalties for individual wage earners and self-employed taxpayers for the 2011 tax year. It let unemployed taxpayers pay taxes by the extended filing deadline to avoid the failure to pay penalty. These provisions have expired.

However, you may still qualify for the first-time penalty abatement, which existed before the Fresh Start Program.

If you do not file a return or pay late, the IRS adds penalties to your account. If this is your first penalty, you can request to have it removed.

IRS Fresh Start program requirements include:

• No tax penalties in the last three years
• Meeting other IRS qualifications

If you do not qualify for first-time abatement, you may still remove penalties by showing reasonable cause for not meeting tax obligations.

You may want to get help from a tax professional when applying for penalty abatement.

How to Apply for the IRS Fresh Start Program

The IRS Fresh Start Program is not a single program. It is a set of IRS policy changes that make it easier to resolve tax debt.

There are several ways to apply for Fresh Start relief. The process depends on whether you qualify for:

• An individual installment agreement
• A business installment agreement
• An offer in compromise (OIC)
• Currently Not Collectible status

With all these programs, you usually must meet the following IRS Fresh Start Program requirements:

• Up to date on all filing requirements.
• Current with estimated quarterly tax payments if self-employed.
• Made all federal tax deposits (payroll tax, sales tax, etc.) if you are a small business owner.
• Not in bankruptcy.

A local tax professional can help you choose the best Fresh Start option. They can also manage communication with the IRS or your state tax agency on your behalf.

The "Real" IRS Tax Debt Relief Program

You may wonder if the IRS Fresh Start Program is a real program. It is not. The IRS does not have a single program called the IRS Tax Debt Relief Program.

Large tax relief companies often use phrases like “IRS Tax Debt Relief Program” as a marketing hook. They do this to get you to call them.

You do not need to work with companies that rely on hype or misleading claims. Instead, look for a local tax professional who can help you find real solutions for your tax debt. This approach avoids gimmicks and focuses on lasting results.

Benefits of Working with a Local Tax Professional

A local tax professional can review your financial situation and help you choose the best tax relief option. They guide you through the application process and act in your best interest.

IRS agents work for the government and focus on collecting tax debt. A tax professional works for you and focuses on solving your problem. You can find a list of tax professionals here that specialize in resolving IRS problems.

You may now be able to keep your tax refund if you get approved for an offer in compromise. For a look at the specifics, check out this overview.

Why Avoid Big Tax Relief Firms

Large tax debt relief firms in this industry have a history of misleading advertising and consumer abuse. They often make promises they cannot keep. Take a look at our post on the worst tax relief firms to learn more.

Instead, look for local tax professionals who offer ethical, personalized service and focus on real solutions.

Using TaxCure, you can search for local specialists, call them, discuss your tax issue, and see if they’re the right fit. A local pro gives you hands-on help, explains your options clearly, and helps you resolve your IRS problems the right way.

Get the high-quality tax help you deserve by using TaxCure to find a local tax debt specialist in your area.