IRS COMMISSIONER ADDRESSES IMPACT OF RECESSION ON TAXPAYERS; PROMISES LENIENCY
As printed in The Wall Street Journal
WASHINGTON — The Internal Revenue Service announced steps to be more lenient on taxpayers who are unable to pay taxes owed, in recognition of the financial troubles reverberating throughout the economy.
“This is a time where government leaders need to be mindful of the challenges citizens are facing,” IRS Commissioner Doug Shulman said in a conference call with reporters.
“I want to be clear: We’re going to continue to enforce the law,” Mr. Shulman added. “But where … citizens are in difficult economic times and in need of some flexibility, we’re going to give it to them.”
Mr. Shulman announced five specific steps the IRS is taking to be more flexible. He said he has given tax assistors greater authority to suspend collection actions in certain circumstances, such as when a taxpayer has recently lost a job, is relying solely on Social Security benefits or is facing steep, unexpected medical costs.
In such cases, tax debt will not be extinguished, but collection activity, including notices and phone calls, levies, seizures and penalties, will be deferred, IRS officials said.
Secondly, taxpayers who miss a payment under an installment agreement with the IRS will not automatically have their agreement suspended, Mr. Shulman said.
That would allow taxpayers who are in a financial bind to skip an installment payment, though Mr. Shulman demurred on the question of whether more than one payment could be skipped without putting the installment agreement at risk.
The IRS will also broaden eligibility for its “offer in compromise” program by considering some taxpayers who appear to have enough equity in their home to cover their tax debt. In the past, offers in compromise have not been considered from such taxpayers.
Under an offer in compromise, a taxpayer can settle with the IRS for less than the full amount of taxes owed.
Mr. Shulman said he has established a special unit to review specific cases where taxpayers with equity in real property may be eligible for an offer in compromise.
Also, taxpayers who miss a payment under an existing offer-in-compromise agreement can work with IRS officials to avoid defaulting on that agreement.
Finally, Mr. Shulman said the IRS will speed levy releases for taxpayers in financial hardship.
Taxpayers who are having difficulty meeting their obligations should contact the IRS to take advantage of the new flexibility, Mr. Shulman said.
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