The IRS has expanded its "Fresh Start" initiative by offering more flexible terms to its Offer-in-Compromise Program. These newest rules enable some financially distressed taxpayers to clear up their tax problems even quicker.

An offer-in-compromise (OIC) is an agreement between a taxpayer and the IRS that settles the taxpayer's tax liabilities for less than the full amount owed. An OIC is generally not accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer's income and assets to determine the reasonable collection potential.

This expansion of the "Fresh Start" initiative focuses on the financial analysis used to determine which taxpayers qualify for an OIC.

Here are the OIC changes:

  • Revising the calculation for a taxpayer's future income The IRS will now look at only one year (instead of four years) of future income for offers paid in five or fewer months; and two years (instead of five years) of future income for offers paid in six to 24 months. All OICs must be paid in full within 24 months of the date the offer is accepted.
  • Allowing taxpayers to repay their student loans Minimum payments on student loans guaranteed by the federal government will be allowed for the taxpayer's post-high school education. Proof of payment must be provided.
  • Allowing taxpayers to pay state and local delinquent taxes When a taxpayer owes delinquent federal and state or local taxes, and does not have the ability to fully pay the liabilities, monthly payments to state taxing authorities may be allowed in certain circumstances.
  • Expanding the Allowable Living Expense allowance Standard allowances incorporate average expenses for basic necessities for citizens in similar geographic areas. These standards are used when evaluating installment agreement and offer-in-compromise requests. The National Standard miscellaneous allowance has been expanded. Taxpayers can use the allowance to cover expenses such as credit card payments and bank fees and charges.

More information on the "Fresh Start" initiative can be found at IRS.gov.

Form 656-B, Offer in Compromise Booklet, and Form 656, Offer in Compromise, can be found at IRS.gov or ordered by calling 1-800-TAX-FORM (800-829-3676).

Links:

  • Form 656, Offer in Compromise (PDF)
  • Form 656-B, Offer in Compromise Booket (PDF)

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Upcoming Tax Dates

July 1 Occupational excise taxes
File Form 11C to register and pay the annual tax if you are in the business of accepting wagers.

July 4 Everyone
Federal Holiday (Independence Day) - Details

July 10 Employees who work for tips
If you received $20 or more in tips during June, report them to your employer - Details

July 10 Communications and air transportation taxes under the alternative method
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July 15 Social security, Medicare, and withheld income tax
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July 15 Nonpayroll withholding
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July 27 Communications and air transportation taxes under the alternative method
Deposit the tax included in amounts billed or tickets sold during the last 15 days of June.

July 29 Regular method taxes
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July 31 Social security, Medicare, and withheld income tax
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July 31 Certain small employers
Deposit any undeposited tax if your tax liability is $2,500 or more for 2015 but less than $2,500 for the second quarter.

July 31 Federal unemployment tax
Deposit the tax owed through June if more than $500.

July 31 All employers
If you maintain an employee benefit plan, such as a pension, profitsharing, or stock bonus plan, file Form 5500 or 5500EZ for calendar year 2014. If you use a fiscal year as your plan year, file the form by the last day of the seventh month after the plan year ends.

July 31 Form 720 taxes
File Form 720 for the second quarter of 2015.

July 31 Wagering tax
File Form 730 and pay the tax on wagers accepted during June.

July 31 Heavy highway vehicle use tax
File Form 2290 and pay the tax for vehicles first used in June.

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