The IRS softens up rules for collecting from distressed taxpayers
Filed under: Debt, Tax, Recession
You know it's tough economic times when the Internal Revenue Service says it will waive late penalties and negotiate payment plans for struggling taxpayers. But with 10 million people out of work as tax-filing season approaches, the IRS is changing its rules to show that the tax man does indeed feel your pain. Yesterday, it announced new steps it's taking to help financially-stressed taxpayers who make good-faith efforts to pay up. They include: - Collection suspensions: IRS employees now have greater authority to suspend collection actions in cases where taxpayers simply can't pay.
- Flexibility for missed payments: Taxpayers can skip a payment or get a reduced monthly payment without automatically suspending their existing installment agreement for back taxes. Previously, the full amount would be due if a payment was missed or late.
- Home equity adjustments: Because of the cratering housing market, the IRS is setting up a special unit to handle cases where a home's value has hindered efforts to reach an "offer in compromise." An OIC agreement lets a taxpayer who can' meet the periodic payment terms settle a tax debt for less than what's owed. Now in cases when home equity is a roadblock, the IRS will give a second look and can offer options to avoid default.
- Speeding up "levy releases": For those whose wages or bank accounts are garnished for delinquent back taxes, the IRS is loosening its requirements for "levy releases" of those amounts.
- Expanding its free e-filing program: It will now include virtually all taxpayers, regardless of income level, to speed up payments and refunds.
IRS Commissioner Doug Shulman announced he's giving his tax agents more leeway to work with taxpayers through their problems. "I've instructed all personnel to be sensitive to taxpayers, especially taxpayers who have previously been compliant....If they pick up the phone or write to us, our people have been instructed to work with taxpayers through these tough economic times." But he emphasizes that the IRS will offer help to Americans who seek out help and show why they're unable to pay. Those who fail to file returns or ignore collection notices will get the cold shoulder. "The most important thing for people to do is to get on the phone or walk into an IRS office."
To help you figure out how to file taxes during an economic downturn, check out the IRS' "What Ifs?" page, which explains the tax situation for different scenarios like unemployment, IRA withdrawals, hits to your 401k and home equity woes. If you're having problems and want to get a jumpstart, you can call the IRS toll-free at 800-829-1040.
Reader Comments (Page 1 of 1)
1-07-2009 @ 8:49PM
sheila said...
IRS is a lil late with this info, we just hired a firm to reduce our debt & they're charging us $3000. that we don't have. Times are tough but the gov. seems to want to make it as tough as they can, but hell, if they can get by with it, why not.
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1-07-2009 @ 8:48PM
Ann said...
The IRS should be dismantled. We need to go to the fair tax!We would have more money in our paychecks. And no prices would not though the roof, most people do not realize how much embedded taxes every purchase we make has in it.
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1-08-2009 @ 6:30PM
Mike said...
Amen ... We need the Fair Tax or something better than than what we now live with and the IRS should be demolished ... Maybe our Government should get rid of the "Federal Reserve" too (since it isn't federal at all but rather owned by the Private Banks ... the same crooks who took bailout funds without accountability) ... Alternatively, Congress could go back to printing "real" money (instead of Promissory Notes) which it is authorized to do under the Constitution ... Just think, a Fair Consumption Tax and Real Money, a winning combination ...
1-07-2009 @ 9:28PM
SHARMIN DOODNAUTH said...
I owed some backtax, its so hard for me to catch up on it , now my husband lost his left limbs. i have so much expence i cant focus on my self, my husband is unemployed i loose one of myperperty, because struggleness i wish someone could helpme to catch on my problem. please help. i need to get help.
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1-07-2009 @ 9:16PM
Clifford said...
It should never have been the citizens obligation to pay tax, since the US Government can print as much money as it pleases, the obligation of paying government employees [et al] should be placed solely on the government. Taxes should be placed on money usage [purchases, money accounts,transactions] Plastic [computertech] is replacing cash and notes. This concept has been floating around for years. This is the 21st century. Our Government is placing a criminal burden on the working class. I am not a socialist, nor should I be considered a criminal for working for my own rewards!
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1-07-2009 @ 9:48PM
Doc said...
A crooked accountant along with the IRS as an accomplice has turned my American dream into an American nightmare. For what it's worth, rich doctor is an urban myth as far as I can see. No paycheck for 2 months forced me to leave the clinic I have been at for 15 years. First time I have been unemployed since I was 12 years old. 401K near $400,000 last year, now down to a little less than $90,000. Selling the house for less than its worth because the IRS sees the "equity". At this point, probably the last house I will ever be able to buy. Maybe after student loans are paid off in 2016. Can't find a family practice doc that speaks English? What a freaking surprise, get used to it, it's going to get worse. You better like your PA or NP, because that is all you are going to get for primary care in the near future. Too many hours, too little pay, no respect from literally anybody except the patients. Get treated like garbage by insurance companies. Rich doctor came out of an IRS agent's mouth, they don't respect anybody. They are sure I have money hidden at those banks in the Bahamas or Switzerland. It would be great if I could afford to go across the street, much less across the ocean. If I could get there, probably wouldn't bother coming back, and not much left to come back to or for.
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1-07-2009 @ 9:54PM
JOHN said...
OH I SEE.........IF I DONT PAY MY TAXES ..I GET HELP......BUT IF I PAY THEM THEM THAN I AM CONSIDERED SCREWED.........I R S.........INTERNAL ROBBING SERVICE...GO GET SCREWED IRS
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1-07-2009 @ 10:10PM
Carol said...
I agree with the Fair Tax Plan. We all would be paying taxes, not just a few of us. Every time you make a purchase, you would pay a tax on that purchase, not sales tax but a percentage. There would be no tax forms to fill out. No loop holes for the large corporations to jump through. Does anyone really know the tax codes we currently have ?? You need to be an accountant to figure it all out. Call your Congressman and state representatives and tell them we want the Fair Tax Plan. Maybe if everyone called something that needs to get done would get done in Congress for a change. They just keep making new laws that we don't need and bailing out big companies that need to learn to operate without the CEO's making such ridiciouls salaries and bonuses. And, get rid of the unions. They are raking in the money and costing us all in the long run.
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1-07-2009 @ 11:15PM
AK said...
IRS IS JUST ANOTHER NAME FOR LEGALIZED CROOKS
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1-08-2009 @ 3:24PM
brenda said...
i think that it's not fair that we have to pay so much taxes they should have some mercy we are all loosing our jobs and our homnes while they are getting richer my husband and i are unemployed and we also need help and these rich people are getting richer i think we all deserved to get some help with a good opportunity to get a good job we are not asking to stay home and be lazy we don't get opportunity like all this other people making lot's of money we all need some serious help or we are going homeless well who knows if anyone cares but this is my opinion
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1-08-2009 @ 1:24AM
Bill said...
With Social Security deductions ending at approx. $100,000 and the highest tax bracket kicking in at approx. $135,000, I beleive that it is time to restructure the tax code to a more progressive rate. Last year the highest income earner to my knowledge with the CEO at Exxon, who reportedly earn $800,000,000 and retired with an annual pension of $400,000,000. I think we have enough of the tax burden on the middle class. Let's raise the tax rate for those earning over $100M per year!
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1-08-2009 @ 1:44AM
Daniel Lovejoy said...
Many years ago, I got a letter stating that I owed them $500. 70 in taxes and the remainder in penalties and late fees. Even though this was their first attempt at letting me know that I owed the $70.
I sent them a check for $50, and requested an audit for the past 7 years to make sure that I didn't owe anything else. The penalties and interest will kill you.
They returned my check, along with a letter that essentially said "never mind".
I've been good with them since, even if they are an illegal, private (non-government) organization that uses mafia-like tactics and no real oversight.
Bring in a flat tax, get rid of the vultures.
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1-08-2009 @ 2:56AM
Mark said...
Great! Anybody else want to shirk their responsibilities and have ME bail them out? I pay my taxes, keep my debt under control, pay my mortgage, and don't run a business into the ground while overcompensating myself, so I don't qualify for any bailout money... Call me STUPID!!!!
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1-08-2009 @ 11:51AM
Dan said...
FLAT Tax is the only FAIR Tax!
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1-08-2009 @ 3:20PM
Liz said...
Yeah it looks like the only perk for me will be free e-filing. Even then I am going to be discriminating about the site I choose.
I never assume I can tell a scam site from a real one by first glance. I check out to ensure it has Extended Validation (EV SSL). Acquiring an EV Cert is much harder since it subjects the company to a lengthy background check. A quick check -- when they have EV SSL the url bar turns green.
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1-12-2009 @ 5:09AM
imsoscrewed415 said...
Here try this; I was pretty much homeless or unemployed and broke in San Francisco working as a contractor with my own EIN and everything from 2002 until 2006 when I found a real job. In 2007 that company went belly up and I've been living in hotels or couch surfing ever since. I've always managed to keep a little bit of cash (sometimes just barely enough to eat) so I never applied for government assistance...until now. After all of this how in the hell do I consider paying taxes?!? The government should be helping ME out; I worked my ass off from the beginning of my work history (1993) up until 2002. WHERE IS MY BAILOUT?
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