What is the IRS Fresh Start Program?
The IRS Fresh Start Program was introduced to help taxpayers who are struggling with tax debt due to various life circumstances. This program is designed to make it easier for individuals and businesses to get back on track. Particularly relevant for Burbank, California residents, the program provides a series of options to reduce tax liabilities and avoid serious collection actions like liens and levies.
Key Features of the Fresh Start Program
- Increased Qualification Thresholds: The program has raised the income thresholds for eligibility, making it easier for individuals and small businesses in Burbank and surrounding neighborhoods, like Toluca Lake and Glendale, to qualify.
- Streamlined Installment Agreements: The Fresh Start Program offers simplified installment agreements for those owing up to $50,000.
- Offers in Compromise: Qualified individuals can settle tax debts for less than the full amount owed.
- Penalty Relief: Taxpayers who meet certain criteria may receive penalties abated for various reasons, such as first-time compliance issues.
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Who Qualifies for the Fresh Start Program?
To take advantage of the Fresh Start Program, residents of Burbank need to meet specific criteria. Here are the primary eligibility requirements:
1. Liability Amount
- Individuals: You qualify if your total unpaid federal tax liability does not exceed $50,000.
- Businesses: Similar limits apply for businesses owing payroll taxes or other types of tax.
2. Income Requirements
You need to demonstrate that you are unable to pay your tax debts in full because of financial hardship. The IRS considers your adjusted gross income (AGI) relative to the area median income, which is critical for Los Angeles County.
3. Compliance with Tax Filing
You must have filed all necessary tax returns for the past five years. For Burbank residents, this means filing CA Form 540 and any applicable state returns under the Franchise Tax Board.
4. Installment Agreement
If you choose to enter a payment agreement, you must adhere to the terms specified by the IRS, which often requires timely monthly payments.
5. Other Conditions
- No pending bankruptcy case.
- You have not been convicted of a tax-related crime.
Steps to Apply for the IRS Fresh Start Program
For those residents of Burbank, navigating the Fresh Start Program can be more manageable with specific steps:
Step 1: Gather Necessary Documents
- Tax Returns: Provide copies of your filed tax returns for the last five years.
- Financial Statements: Be ready to supply proof of income, monthly expenses, and any assets.
Step 2: Determine Your Eligibility
- Use the IRS's Eligibility Worksheet to pre-assess if you qualify for either the installment agreement or the Offer in Compromise.
Step 3: Choose Your Path
the Fresh Start Program allows applicants to choose between:
- Installment Agreement: For those wishing to pay in smaller, manageable chunks.
- Offer in Compromise (OIC): If you cannot afford to pay your tax bill entirely, an OIC can be a powerful option to reduce your obligation.
Step 4: Complete the Necessary IRS Forms
- Form 656 for an Offer in Compromise.
- Form 9465 for an Installment Agreement. Ensure you also consider any additional California-specific forms related to state taxes.
Step 5: Submit Your Application and Follow Up
- When you submit your application, it’s crucial to follow up with the IRS, especially if you don’t hear back within six weeks.
Common Challenges for Burbank Residents
- Many residents experience difficulty in proving financial hardship, especially in a high-cost area like L.A. Be prepared to clearly document your situation.
- Misunderstanding tax liabilities can lead to complications, emphasizing the need for professional advice.
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Conclusion
If you're a resident of Burbank, navigating taxes and potential debt can be an overwhelming process. The IRS Fresh Start Program provides a structured way to help ease your financial burden. By understanding the eligibility requirements and steps to take, you can reclaim financial stability. As a trusted resource, Calculus Tax is here to assist you through the entire process, from paperwork to negotiations with the IRS.
For more tailored guidance, consider exploring our services like What to Do When You Receive an IRS Collections Notice: 2026 Guide for Burbank Residents and Business Tax Audit Preparation: What to Expect in California 2026.
Don’t let tax debt weigh you down; take the first step towards financial freedom today!
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Need Expert Help?
Our Burbank accounting team can handle this for you. Schedule a free consultation.
Get Free Consultation
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