4. Additional review for offers in compromise on home values: An offer in compromise (OIC), an agreement between a taxpayer and the IRS that settles the taxpayer’s tax debt for less than the full amount owed, may be a viable option for taxpayers experiencing economic difficulties. However, the equity taxpayers have in real property can be a barrier to an OIC being accepted. With the uncertainty in the housing market, the IRS recognizes that the real-estate valuations used to assess ability to pay may not be accurate. So in instances where the accuracy of local real estate valuations is in question or other unusual hardships exist, the IRS provides for a second review of the information to determine if accepting an offer is appropriate.
5. Prevention of offer in compromise defaults: Taxpayers who are unable to meet the periodic payment terms of an accepted OIC will be able to contact the IRS office handling the offer for available options to help them avoid default.
6. Expedited levy releases: The IRS will speed the delivery of levy releases by easing requirements on taxpayers who request expedited levy releases for hardship reasons. Taxpayers seeking expedited releases for levies to an employer or bank should contact the IRS number shown on the notice of levy to discuss available options. When calling, taxpayers requesting a levy release due to hardship should be prepared to provide the IRS with the fax number of the bank or employer processing the levy.
While the IRS is encouraging taxpayers to take advantage of the new provisions, tax officials also say that the agency will only help taxpayers who ask for help. Taxpayers who simply ignore their tax bill, or “go dark” as Shulman says, will feel the full force of the IRS.
To get a sense of how the new programs will work, and for more information on who to contact, visit the IRS’s web page “The What Ifs of an Economic Downturn.”
Overall, Shulman urges taxpayers who can’t pay up to “not panic” and to reach out to the IRS for help. He urges financially strapped Americans to file their tax returns before the April 15 deadline, pay what they can on them and follow up with a call to the IRS at 1-800-829-1040, where a tax specialist can discuss payments options.
It’s a new face for the IRS, but a welcome one for Americans suffering economic hardship these days. With April 15 fast approaching, it’s not a moment too soon.