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IRS agents will be more flexible with taxpayers who have seen their incomes drop during the recession.
Published on: 03/12/10
IRS agents will be more flexible with taxpayers who have seen their incomes drop during the recession.
IRS Commissioner Doug Shulman announced Tuesday that the agency is loosening its rules for negotiating tax settlements for less than the amount owed.
The agency also plans to open about 1,000 offices on various Saturdays, beginning March 27, to give taxpayers more opportunities to work with IRS employees to resolve their tax debts.
The IRS expects to process 138 million individual tax returns this year.
Most will qualify for refunds, but with the economy shedding more than 8 million jobs since the start of the recession, many taxpayers will be unable to make timely payments.
Under an IRS initiative started a year ago, agents can negotiate new payment plans and postpone asset seizures for delinquent taxpayers who are financially strapped but make a good-faith effort to settle their tax debts.
Shulman cautioned that those seeking help will have to demonstrate their inability to pay.
Those who fail to file tax returns, or who simply ignore collection notices, will not be eligible for help. Individual tax returns are due April 15.
To qualify for a tax settlement, taxpayers must file detailed financial statements, listing all their assets, liabilities and income, said Jackie Perlman, an analyst at the Tax Institute at H&R Block.
Taxpayers could be required to sell assets to help settle tax debts.
"You can't just call up the IRS and say, 'Hey, I lost my job. I can't pay the bills. Can you cut my taxes in half?' " Perlman said.
"Nice try," Perlman said, "but it doesn't work that way."
Shulman said new rules for negotiating tax settlements, known as offers in compromise, better reflect the economic problems many taxpayers face.
IRS agents can accept settlements only for less than the full amount owed if they determine there is little chance the taxpayer will be able to pay.
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