Policies regarding property tax liens have been revamped by the Internal Revenue Service to go a little easier on taxpayers. The amount of tax debt that sets the IRS lien machine into motion has been doubled. The agency has also made more individuals and companies eligible for offer-in-compromise agreements. Withdrawing, instead of releasing tax liens will also help to protect taxpayer credit reports.
IRS calls off the dogs (sort of)
A lien is used by the IRS when unpaid tax debt is found from an American making it so the taxpayer’s property is legally owned by the Internal Revenue Service. Priority is given over other creditors that can be owed by a taxpayer with the IRS tax lien. There has been an increase from $5,000 to $10,000 in the threshold for filing a tax lien due to brand new IRS rules. For back taxes of $25,000 or less, the Internal Revenue Service is also offering to withdraw a tax lien if the taxpayer establishes installment payments through direct-debit from a financial institution account. Withdrawing, instead of releasing a lien is important because when the Internal Revenue Service withdraws a lien, it could be removed from a taxpayer’s credit history. In the past, liens were “released” instead. This didn’t take it off of credit states though.
Even more Internal Revenue Service lien changes going on
Other tax collection changes made by the Internal Revenue Service consist of making more working class individuals eligible for offer-in-compromise agreements, which allow working class individuals to pay less than the full amount owed on back taxes. Tax debts qualifying for offer-in-compromise agreements have been elevated to $50,000 from $25,000 for both individuals and smaller businesses. The annual income threshold for offer-in-compromise agreements has also been raised from $50,000 to $100,000. Those applying for a compromise can be less frustrated with the agency too. This is because personal conversations instead of letters can be used for contact. Car payments can be made instead with the IRS now too.
Getting help from the National Taxpayer Advocate
The reason for the Internal Revenue Service tax lien changes is most likely Olson. Olson was a National Taxpayer Advocate. The argument from Olson was always that the Internal Revenue Service hurts people that are simply attempting to pay debts. America’s bad economy has lead to more lien filings. There was a 14 percent increase last year alone. Since 1999, tax liens have increased 550 percent. Liens are filed by the IRS automatically. This is when a taxpayer’s ability to pay debts is unclear and they reach the limit. The IRS also lacks evidence that tax liens are worth the cost of enforcing them.
Articles cited
Market Watch
marketwatch.com/story/irs-eases-up-on-people-who-cant-pay-tax-bill-2011-02-24
CBS Money Watch
moneywatch.bnet.com/investing/blog/make-money/stop-the-irs-from-destroying-your-credit-4-moves/870/
Journal of Accountancy
journalofaccountancy.com/Web/20113894.htm
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