Owe Back Taxes? IRS Is Offering ReliefMarch 9th, 2011
Do you owe back taxes? Take advantage of a little extra mercy that the IRS is extending in the coming months. According to Kiplinger's, the IRS has announced that it will be raising its federal tax lien threshold from $5,000 to $10,000 in unpaid back taxes. And, according to a statement by the government agency, the IRS is modifying its procedures regarding lien withdrawals. Liens will now be withdrawn once full payment of taxes is made, if the taxpayer requests it. In order to speed the withdrawal process, the IRS will also streamline its internal procedures to allow collection personnel to withdraw the liens once back taxes are paid.
For taxpayers with unpaid assessments of $25,000 or less, the IRS will now allow lien withdrawals under several scenarios:
- Lien withdrawals for taxpayers entering into a Direct Debit Installment Agreement.
- The IRS will withdraw a lien if a taxpayer on a regular Installment Agreement converts to a Direct Debit Installment Agreement.
- The IRS will also withdraw liens on existing Direct Debit Installment agreements upon taxpayer request.
The IRS is hoping to lessen the negative impact on taxpayers who owe back taxes. Other changes towards this goal include creating easier access to Installment Agreements for more struggling small businesses and expanding a streamlined Offer in Compromise program to cover more taxpayers.
Will these changes be around for the long run? It’s difficult to say for sure. The IRS plans to review the results and impact of the lien threshold change in about a year. Make sure you address these opportunities as soon as possible with your tax advisor, before they slip away.