IRS Fresh Start Program Eligibility Calculator
Use this calculator to get an initial idea of whether you might qualify for relief options under the IRS Fresh Start Program, such as an Offer in Compromise (OIC) or an Installment Agreement. This tool provides a general assessment and is not a substitute for professional tax advice.
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function calculateFreshStart() {
var totalTaxDebt = parseFloat(document.getElementById('totalTaxDebt').value);
var yearsUnfiled = parseInt(document.getElementById('yearsUnfiled').value);
var monthlyGrossIncome = parseFloat(document.getElementById('monthlyGrossIncome').value);
var monthlyLivingExpenses = parseFloat(document.getElementById('monthlyLivingExpenses').value);
var liquidAssets = parseFloat(document.getElementById('liquidAssets').value);
var homeEquity = parseFloat(document.getElementById('homeEquity').value);
var carEquity = parseFloat(document.getElementById('carEquity').value);
var filedAllReturns = document.getElementById('filedAllReturns').value;
var currentEstimatedPayments = document.getElementById('currentEstimatedPayments').value;
var bankruptcyStatus = document.getElementById('bankruptcyStatus').value;
var resultDiv = document.getElementById('freshStartResult');
var messages = [];
var potentialOptions = [];
// Input validation
if (isNaN(totalTaxDebt) || totalTaxDebt < 0 ||
isNaN(yearsUnfiled) || yearsUnfiled < 0 ||
isNaN(monthlyGrossIncome) || monthlyGrossIncome < 0 ||
isNaN(monthlyLivingExpenses) || monthlyLivingExpenses < 0 ||
isNaN(liquidAssets) || liquidAssets < 0 ||
isNaN(homeEquity) || homeEquity < 0 ||
isNaN(carEquity) || carEquity < 0) {
resultDiv.innerHTML = '
Input Error
Please enter valid positive numbers for all financial and numerical fields.';
return;
}
messages.push('
Potential IRS Fresh Start Program Eligibility:
');
// General Compliance Checks
var compliant = true;
if (filedAllReturns === 'no') {
messages.push('
Important: To qualify for most IRS relief programs, you must have all required tax returns filed. This is a critical first step.');
compliant = false;
}
if (currentEstimatedPayments === 'no') {
messages.push('
Important: You generally need to be current on estimated tax payments (if applicable) for the current year to be eligible for relief programs.');
compliant = false;
}
if (bankruptcyStatus === 'yes') {
messages.push('
Note: If you have filed for bankruptcy, your tax debt may be handled through the bankruptcy proceedings. Consult with a tax professional or bankruptcy attorney.');
// This doesn't necessarily disqualify, but changes the path
}
if (!compliant) {
messages.push('Based on your responses, you may need to address compliance issues (filing returns, making estimated payments) before fully qualifying for Fresh Start options.');
resultDiv.innerHTML = messages.join(");
return;
}
// Calculate disposable income
var disposableIncome = monthlyGrossIncome – monthlyLivingExpenses;
if (disposableIncome 0 && reasonableCollectionPotential < totalTaxDebt * 0.8) { // If RCP is significantly less than debt
potentialOptions.push('
Offer in Compromise (OIC): Based on your financial situation, you might be a candidate for an Offer in Compromise, where the IRS may agree to accept a lower amount to settle your tax debt. Your estimated "reasonable collection potential" is $' + reasonableCollectionPotential.toLocaleString() + ', which is less than your total debt.');
oicLikely = true;
} else if (totalTaxDebt > 0 && disposableIncome <= 0 && liquidAssets <= 0 && homeEquity <= 0 && carEquity <= 0) {
potentialOptions.push('
Offer in Compromise (OIC): With very limited disposable income and assets, you might be a candidate for an Offer in Compromise, especially if your financial hardship is significant.');
oicLikely = true;
} else if (totalTaxDebt > 0) {
messages.push('Your current financial situation (disposable income and assets) suggests that an Offer in Compromise might be challenging, as your ability to pay appears to cover a significant portion of your debt. However, other factors like doubt as to liability or effective tax administration could still apply.');
}
// Installment Agreement (IA) Assessment
if (totalTaxDebt > 0) {
if (totalTaxDebt 0) {
potentialOptions.push('
Streamlined Installment Agreement: With a tax debt of $' + totalTaxDebt.toLocaleString() + ' (under $50,000) and some disposable income, you likely qualify for a streamlined Installment Agreement, allowing you to make monthly payments for up to 72 months.');
} else if (totalTaxDebt > 50000 && disposableIncome > 0) {
potentialOptions.push('
Installment Agreement: With your tax debt and disposable income, a regular Installment Agreement is a strong possibility. The IRS will work with you to determine an affordable monthly payment.');
} else if (totalTaxDebt > 0 && disposableIncome <= 0) {
potentialOptions.push('
Installment Agreement (Hardship): Even with limited or no disposable income, an Installment Agreement might still be an option, potentially with a very low payment, especially if an OIC is not feasible.');
}
}
// Penalty Abatement
if (totalTaxDebt > 0) {
messages.push('
Penalty Abatement: If a significant portion of your debt is due to penalties, you may be able to request penalty abatement if you have "reasonable cause" for non-compliance or if it\'s your first time facing certain penalties (First Time Abate). This calculator cannot assess specific eligibility for penalty abatement, but it\'s an option to explore.');
}
if (potentialOptions.length > 0) {
messages.push('Based on your input, you may potentially qualify for the following IRS Fresh Start options:
' + potentialOptions.join(") + '
');
} else if (totalTaxDebt > 0) {
messages.push('Based on your current financial situation and compliance status, it appears you may have options to resolve your tax debt. It is highly recommended to consult with a tax professional to explore the best path forward.');
} else {
messages.push('You indicated no tax debt. If this is correct, you may not need the Fresh Start Program. If you have other tax concerns, please consult a tax professional.');
}
messages.push('
Disclaimer: This calculator provides a general estimate and is not a guarantee of eligibility or a substitute for professional tax advice. The IRS makes final determinations based on a thorough review of your specific financial situation and circumstances. We strongly recommend consulting with a qualified tax professional or tax attorney to discuss your options.');
resultDiv.innerHTML = messages.join(");
}
Understanding the IRS Fresh Start Program
The IRS Fresh Start Program is a set of initiatives designed to help taxpayers who are struggling to pay their tax debts. Introduced in 2011, it expanded and streamlined several existing tax relief options, making it easier for individuals and businesses to resolve their tax issues and avoid aggressive collection actions.
Key Components of the Fresh Start Program:
- Offer in Compromise (OIC): An OIC allows certain taxpayers to resolve their tax liability with the IRS for a lower amount than what they originally owe. The IRS considers an OIC if there's doubt as to collectibility (you can't pay the full amount), doubt as to liability (you don't believe you owe the full amount), or if paying the full amount would cause economic hardship (effective tax administration). The calculator above provides a simplified assessment of your "ability to pay" which is a key factor for OIC eligibility.
- Installment Agreement (IA): An Installment Agreement allows taxpayers to make monthly payments to the IRS for up to 72 months (6 years). This is a common option for those who can't pay their tax debt in full immediately but can afford regular payments. The Fresh Start Program made it easier for more taxpayers to qualify for streamlined installment agreements, especially for debts under $50,000.
- Penalty Abatement: The IRS can remove or reduce penalties if you have a reasonable cause for not meeting your tax obligations (e.g., filing late, paying late). The Fresh Start Program also includes the "First Time Abate" policy, which allows for the abatement of certain penalties if you have a clean compliance history for the past three years.
- Lien Threshold Increases: The program increased the threshold for when the IRS generally files a Notice of Federal Tax Lien, meaning liens are less likely to be filed for smaller tax debts.
Who Qualifies for Fresh Start?
Eligibility for specific Fresh Start options depends on several factors, including:
- Compliance: You must have filed all required tax returns. This is a fundamental requirement for almost all IRS relief programs.
- Current Payments: You must be current on your estimated tax payments for the current year (if applicable) or have adequate withholding.
- Financial Hardship: For options like an Offer in Compromise, the IRS assesses your ability to pay based on your income, expenses, and assets.
- Debt Amount: The total amount of tax debt can influence which programs you qualify for (e.g., streamlined installment agreements have a debt limit).
How This Calculator Helps:
This calculator provides a preliminary assessment by considering your tax debt, income, expenses, assets, and compliance status. It helps you understand if you meet the basic criteria for an Offer in Compromise or an Installment Agreement. However, the IRS's determination is complex and involves detailed financial analysis. Therefore, this tool should be used as a starting point.
Next Steps:
If this calculator suggests you might qualify for Fresh Start options, it is highly recommended to:
- Consult a Tax Professional: A qualified tax attorney or Enrolled Agent can provide personalized advice, help you gather necessary documentation, and negotiate with the IRS on your behalf.
- Gather Documents: Collect all relevant financial records, including tax returns, income statements, bank statements, and expense records.
- Understand the Process: Each program has specific application forms and procedures. A professional can guide you through these.
The IRS Fresh Start Program offers a lifeline to many taxpayers. Don't ignore your tax debt; explore these options to find a resolution.