February newsletter "MISSING TAX REFUNDS & UNDERSTANDING TAX STATISTICS" we spoke about many individual tax payers are possibly missing out on tax refunds for the 2008 period across various States in the US. The IRS is still holding approximately $1 billion in refunds for those 1 million taxpayers that haven't filed. In order to claim these outstanding refunds, the tax payer must be current with the tax years after 2008 (2009 and 2010). The IRS reported in February 2012 that there's approximately 4,000 individuals in DC, 24,600 in Maryland and 30,800 in Virginia that's owed a refund from 2008. We also spoke about comprehending tax statistics in last month's newsletter, since then, the IRS has released an updated report for the period between October 2010 and September 2011. Here are some highlights from the report: 

There's some helpful ways to handle your tax obligations in a positive way and we wanted to share some of these alternatives with you in this month's newsletter. We routinely mention to new clients that not all is lost when finding out they have an outstanding tax obligation for their federal taxes, simply because there's options available for everyone. Let's speak about the recent expansion of the Internal Revenue's Service program called Fresh Start Initiative. Some think its a new program offered by the IRS, but it's not, it's a provision under Fresh Start that dates back to 2008, the Internal Revenue Service expanded its "Fresh Start" initiative to help struggling taxpayers who didn't qualify before to be able to qualify now not withstanding after meeting specific guidelines first. The Fresh Start initiative provides taxpayers with three options:

1. Penalty Relief - The Fresh Start Penalty Relief Initiative gives eligible taxpayers a 6-month extension to fully pay 2011 taxes. Interest still applies on the 2011 taxes during April 17, 2012 and until the tax is paid, but taxpayers won't face penalties such as failure-to-pay if you pay your tax, interest and any other penalties in full by Oct. 15, 2012. This program is for tax payers who have been unemployed at least 30 consecutive days during the 2011 or in 2012 up to the April 17th deadline or self-employed individuals who experienced a 25 percent or greater reduction in business income in 2011 due to the economy.

2. Installment Agreement - A payment plan option for those who cannot pay their entire tax bill by the due date. The Fresh Start provisions give more taxpayers the ability to use streamlined installment agreements to catch up on back taxes and also more time to pay. The new threshold for requesting an installment agreement has been raised from $25,000 to $50,000. The maximum term for streamlined installment agreements has been raised to six years from the current five-year maximum. Installment agreements also allow you to pay less in penalties but the interest continues to accrue on the balance until paid off in full.

3. Offer In Compromise (OIC) - The IRS expanded the Offer in Compromise (OIC) program to cover a larger group of struggling taxpayers. An Offer in Compromise is an agreement between a taxpayer and the IRS that settles the taxpayer's tax liabilities for less than the full amount owed. It's very likely the offer will not be accepted if the IRS believes that 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 make a determination regarding the taxpayer's ability to pay. The OIC now recognizes many taxpayers are still struggling to pay their bills so the agency has been working on more common-sense changes to the program to more closely reflect real-world situations.