Jim Buttonow, CPA, CITP
SVP Post-Filing Tax Services
Updated on: July 12, 2022
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Many people who owe back taxes to the IRS still hear about the IRS Fresh Start Initiative on the airwaves. Many ads tout Fresh Start as an opportunity to settle back taxes with the IRS.
The Fresh Start Initiative began as a series of major IRS collection policy changes in 2011 and 2012, to help taxpayers who were struggling to pay their back taxes. The IRS announced two major changes to its collection policy, which are still in effect today.
In 2011, the IRS made several changes that provided relief from federal tax liens and allowed more taxpayers to obtain favorable payment terms with the IRS.
In 2012, the IRS made more changes. Most of these changes gave more taxpayers access to the offer in compromise (OIC) program.
The IRS made the OIC program more attractive by:
For example, if you qualify for an OIC, have $500 in monthly disposable income and $5,000 in net equity in assets, you would see your OIC offer amount drop to $11,000 from $29,000 (pre-Fresh Start). Fresh Start changes like these made the OIC more attractive. However, after a surge in OIC applications in 2012 and 2013, OIC applications and approvals have declined. In fact, in 2020, the IRS accepted fewer OICs (13,980 accepted) than the last pre-Fresh Start year in 2011 (20,000 accepted).
The best thing to do when you owe taxes is to see whether you can reduce the amount you owe. Depending on your situation, you should consider solutions such as:
If you still owe and can’t pay, consider several collection alternatives including:
For help creating a strategy to address your tax issue, visit Jackson Hewitt’s Tax Resolution Hub to see how we can help you.
About the Author
Jim Buttonow, CPA, CITP, is the Senior Vice President for Post-Filing Tax Services at Jackson Hewitt. He’s been a leader in helping taxpayers and tax professionals resolve tax problems with the IRS, where he had worked for 19 years in various compliance-enforcement positions. Prior to his current role, Jim’s consulting practice focused on the areas of tax controversy and tax administration, which included leading product development on tax problem software for tax professionals, testifying before Congress, advocating for IRS transparency and efficiency, and proposing innovative large-scale solutions for taxpayers and tax professionals. Jim is also the author of Tax Problems and Solutions Handbook, a publication aimed at helping tax pros work more effectively in post-filing matters and resolving their clients’ most common tax problems.