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October 2013 Update

image of cover of National Taxpayer Advocate Report Fiscal Year 2014

Download the full report by clicking the image above.

Wondering how the more lenient IRS “Fresh Start” Initiative is working since our last report in September 2012? The news is mostly good. In their Fiscal Year 2014 Objectives Report to Congress, The U.S. National Taxpayer Advocate shared specific results and views about how taxpayers are doing under the Fresh Start Initiative.

Key Questions

  • Q: Are more total offers from taxpayers being accepted by the IRS than before the IRS Fresh Start Initiative?
  • A: Yes, total accepted offers are up 65% over the same period in 2011.
  • Q: Is the overall IRS acceptance rate for offers increasing?
  • A: Yes, the overall acceptance rate for OICs was 44% at the midpoint of FY 2013. That’s up from 38% the year before which was reported to be one of the highest offer acceptance rates the National Taxpayer Advocate had seen in years.

This means it’s still not too late to take advantage of the more lenient IRS Fresh Start Initiative.

What’s the Bad News?

Is there any bad news cited in the report? Yes.

  • Most troubling are the red flags in the report about the failure of IRS employees and Tax Professionals to communicate or correctly adhere to the more lenient guidelines.
  • In the same report, The National Taxpayer Advocate cautioned that the use of IRS Installment Agreements to pay off tax debt continues to decline. This is significant because Installment Agreements are much easier to qualify for than an IRS Offer in Compromise.

“TAS (Tax Advocate Service) continues to encounter instances in casework and external outreach sessions where neither IRS Collection employees nor tax professionals are fully aware of the revised policies . Further, an ongoing internal review of TAS cases involving collection issues has confirmed that Collection employees are not routinely adhering to the revised procedures . .”

You read that right.

Now that’s a problem! The difference in the old and new calculations for the IRS Offer in Compromise program are significant. We’re not talking about splitting hairs.

What’s it all mean? It’s critical that you know the facts about the IRS Fresh Start Initiative, and in my opinion, that you get qualified expert help to make sure your case isn’t one of those that’s being mis-handled.

You shouldn’t have to check up on the IRS to see if they are following their own rules. Unfortunately, I have over 20 years of experience as a Tax Attorney that says this kind of misinformation and confusion is nothing new.

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