Dallas Auditor .com

The drumbeat of bad economic news has even the IRS cutting individuals some slack when it comes to paying their tax debts. IRS Commissioner Douglas Shulman said in January that he has expanded the authority of agency personnel to suspend collection activities for individuals struggling during the current economic slowdown. However, the extent of the IRS’s help is still unknown. Shulman cautioned that only “compliant” taxpayers would be eligible for help. At the same time, the IRS is bracing for a record number of returns from individuals seeking early refunds.

Recession

Every year, millions of taxpayers send a check to the IRS on April 15. This year, the economic slump and rising unemployment has many individuals wondering how they will meet their tax obligations.

Shulman said that the IRS is aware of this problem and will work with taxpayers. “I’ve instructed all (IRS) telephone assistors and people in the field to work with taxpayers to the extent they have a legitimate need.” Help may take the form of postponement of collection, flexibility for missed installment agreement payments, additional review of offers-in-compromise, and expedited levy releases.

Collection. IRS employees will have greater authority to suspend collection actions in certain hardship cases where taxpayers are unable to pay. IRS customer service representatives may be able to suspend collection without documentation to minimize burden on the taxpayer.

Missed payments. The IRS is allowing more flexibility for previously compliant individuals in existing installment agreements who have difficulty making payments because of a job loss or other financial hardship. The IRS may allow a skipped payment or a reduced monthly payment amount without automatically suspending the installment agreement.

Offers in compromise. With the uncertainty in the housing market, the IRS recognizes that the real estate valuations used to assess a taxpayer’s ability to pay may not be accurate. In instances where the accuracy of local real-estate valuations is in question or other unusual hardships exist, the IRS is creating a new second review of the information to determine if accepting an offer is appropriate. Additionally, taxpayers who cannot meet the periodic payment terms of an accepted offer will be able to contact the IRS for options to help them avoid default.

Levies. The IRS will accelerate the delivery of levy releases by easing requirements on taxpayers who request expedited levy releases for hardship reasons.

Who may qualify?

Shulman did not elaborate on the criteria the IRS will use to determine if an individual qualifies for postponement of collection. “We want to go the extra mile to help taxpayers, especially those who’ve done the right thing in the past and are facing unusual hardships.” This seems to indicate that help will be limited to individuals who have a history of compliance with their tax obligations.

Material released separately by the IRS identifies examples of distressed individuals who may qualify for suspension of collection. These include, but may not be limited to:

· Individuals who have recently lost a job;

· Individuals relying solely on Social Security or welfare income; and

· Individuals facing devastating illness or significant medical bills.

Contact

The IRS is urging individuals to contact its customer service representatives if they are unable to meet their tax obligations because of job loss. We encourage you to contact our office first. We are familiar with IRS procedures and will make sure that the IRS receives all the information it needs to make a determination. And, if we’re unhappy with the help from IRS customer service, we can take your matter to the next level at the IRS.

Early filing

Refund filers traditionally file early. This filing season is likely to see a surge in early filing for refunds from individuals who may have recently lost a job or suffered other setbacks during the recession.

If you are thinking of filing early this year, make sure you have all the necessary documents, especially your Form W-2. This is one of the most common mistakes early filers make. Without all the correct documents, schedules, forms, and attachments, the IRS cannot process your return and your refund will be delayed. Our office can help you file early and correctly. Please contact us today.