The IRS, and Congress, are a little heavy-handed. And by “a little” I mean “a lot”! Congress issues many, many complex laws and expects people to follow them to the letter. And each law is usually in some way connected to making YOU owe more tax. Thus, Congress’ collection agency, the IRS, normally carries a big stick, ready to whack taxpayers with it in the form of new legislation and more taxes owing.
But recently, the IRS seems to have realized that they can only bleed someone for so long. If they keep taking their pound of flesh, they are eventually left with taxpayers who have nothing else to give. And this is the case even more so now than ever before because of the economic turmoil facing the world.
So, the IRS has “graciously” conceded to “additional steps to help people who owe back taxes”… in particular, for those who are facing “unusual hardships”. . Here are some of those additional steps:
The IRS increased the authority of its employees to suspend collection when there’s a hardship situation. This includes:
- Job loss
- Social security or welfare recipients
- Significant medial bills
Taxpayers who have difficulty making payments (because of a number of reasons including job loss) may skip a payment or pay reduced payments.
Also, the Offer in Compromise has been augmented to allow for drops in home values (which once may have created difficulty in getting the IRS to agree to an OIC). And those who have an OIC agreement but are at risk of default now have options to avoid default.
Lastly, the IRS is speeding up its delivery of levy releases by reducing the requirements that taxpayers must meet when requesting a levy release.
In some ways, it’s nice to see the IRS finally recognizing that it needs to help people who want to pay their taxes but cannot. After all, it costs taxpayers a lot of money to punish taxpayers who aren’t paying their taxes… and law-abiding taxpayers who simply are not able to pay should not face dire consequences, particularly in this economy.
But let’s be realistic: While it’s nice to see the IRS doing something about it, the only reason they’re doing it is because they know that the pound of flesh is running out. They know that they can’t get more money out of taxpayers in the traditional way, and with the economy making it more and more difficult, they have developed “creative financing” to make it happen.
Tentative kudos to the IRS.