IRS Commissioner Douglas Shulman announced the new initiatives in Washington, D.C., on February 24. “These new steps are in the best interest of both taxpayers and the tax system. People will have a better chance to stay current on their taxes,” Shulman said. Many of the details of the changes are expected to be fleshed out in future announcements and guidance from the IRS.
Tax liens
A tax lien gives the IRS a claim to a taxpayer's property as security or payment for a tax debt. Once a lien arises, the IRS generally cannot release the lien until the taxes, penalties, interest, and recording fees are paid in full or until the IRS may no longer legally collect the tax.
Shulman announced that liens will be withdrawn once full payment of taxes is made if the taxpayer requests it. Additionally, the Service will allow lien withdrawals in certain cases where taxpayers enter into a direct debit installment agreement. The IRS intends to revise its internal procedures to expedite the withdrawal of liens.
The distinction between releasing a lien and withdrawing a lien is important. Once the IRS files a tax lien, a taxpayer's credit rating may be harmed. If the IRS releases the lien, the lien continues to be reflected on the taxpayer's credit report. When a lien is withdrawn, it is removed from the taxpayer's credit report.
Installment agreements
An installment agreement allows taxpayers to make a series of monthly payments over time to satisfy their tax debts. Certain installment agreements are called “streamlined” because they do not require a financial statement.
Shulman announced that the IRS is raising the threshold amount for small businesses from $10,000 in tax liabilities to $25,000 in tax liabilities for a streamlined installment agreement. To participate, a small business must make its payments through direct debit. “By expanding payment options we can help small businesses pay their tax bill while freeing up cash flow to keep funding their operations,” Shulman said.
Offers in compromise
An offer in compromise (OIC) is an agreement between a taxpayer and the IRS that settles the taxpayer's liabilities for less than the full amount owed. The IRS may accept an OIC based on three grounds: (1) doubt as to collectability; (2) doubt as to liability; or (3) effective tax administration. Acceptance of an OIC is within the sole discretion of the IRS. The OIC program is frequently misunderstood by taxpayers. Claims of being able to settle tax debts for much less than the amount owed are usually exaggerated.
Shulman announced that the IRS is expanding a new streamlined OIC program to cover taxpayers with annual incomes up to $100,000 to participate. Taxpayers must owe less than $50,000 to participate.
If you have any questions about the new steps the IRS is taking, please contact our office.
Tax liens
A tax lien gives the IRS a claim to a taxpayer's property as security or payment for a tax debt. Once a lien arises, the IRS generally cannot release the lien until the taxes, penalties, interest, and recording fees are paid in full or until the IRS may no longer legally collect the tax.
Shulman announced that liens will be withdrawn once full payment of taxes is made if the taxpayer requests it. Additionally, the Service will allow lien withdrawals in certain cases where taxpayers enter into a direct debit installment agreement. The IRS intends to revise its internal procedures to expedite the withdrawal of liens.
The distinction between releasing a lien and withdrawing a lien is important. Once the IRS files a tax lien, a taxpayer's credit rating may be harmed. If the IRS releases the lien, the lien continues to be reflected on the taxpayer's credit report. When a lien is withdrawn, it is removed from the taxpayer's credit report.
Installment agreements
An installment agreement allows taxpayers to make a series of monthly payments over time to satisfy their tax debts. Certain installment agreements are called “streamlined” because they do not require a financial statement.
Shulman announced that the IRS is raising the threshold amount for small businesses from $10,000 in tax liabilities to $25,000 in tax liabilities for a streamlined installment agreement. To participate, a small business must make its payments through direct debit. “By expanding payment options we can help small businesses pay their tax bill while freeing up cash flow to keep funding their operations,” Shulman said.
Offers in compromise
An offer in compromise (OIC) is an agreement between a taxpayer and the IRS that settles the taxpayer's liabilities for less than the full amount owed. The IRS may accept an OIC based on three grounds: (1) doubt as to collectability; (2) doubt as to liability; or (3) effective tax administration. Acceptance of an OIC is within the sole discretion of the IRS. The OIC program is frequently misunderstood by taxpayers. Claims of being able to settle tax debts for much less than the amount owed are usually exaggerated.
Shulman announced that the IRS is expanding a new streamlined OIC program to cover taxpayers with annual incomes up to $100,000 to participate. Taxpayers must owe less than $50,000 to participate.
If you have any questions about the new steps the IRS is taking, please contact our office.
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