Agents given greater latitude for leniency with delinquents

Internal Revenue Service field agents are being offered new flexibility to go easier on delinquent taxpayers caught up in the current economic squeeze.

Exactly how much additional discretion financially struggling taxpayers and their CPAs can expect from IRS enforcement personnel remains to be seen, but Commissioner Doug Shulman made it clear that he wants to "empower" the service's field agents to soften the tax pinch on economically distressed Americans.

Shulman disclosed plans to grant this additional flexibility to IRS employees as part of a broader action plan to provide more assistance and compassion for taxpayers struggling through the recession.

It is "inevitable that during an economic downturn, taxpayers may fall behind in paying their taxes," the IRS commissioner said recently in outlining the initiative before a House Ways & Means Oversight Subcommittee. "I am committed to striking the right balance between collecting the revenues needed to fund the government, and using all the tools available to us to work with taxpayers who find themselves in difficult financial situations."

The goal, he said, will be "to provide tangible relief to taxpayers in distress, while also helping to prevent others from straying across the line into non-compliance."

Shulman made it clear that IRS auditors and other field personnel will play a key role in achieving this objective: "In the end, we need to be flexible and empower our employees to use their judgment when dealing with taxpayers."

Besides providing strapped taxpayers with extra wiggle room, a new policy granting rank-and-file IRS personnel greater flexibility in policing the Tax Code may also address complaints by some field agents who contend that they have too little discretion to help taxpayers under programs such as the service's offer-in-compromise program.

According to Shulman, IRS employees have already been given greater flexibility to suspend collection actions in certain hardship cases where taxpayers are unable to pay because of a job loss or medical expenses.

The agency has also adopted a more flexible response to what it termed "previously compliant" taxpayers who are having trouble making payments on an existing IRS installment agreement due to financial hardship. Similarly, the service is working with taxpayers to help them avoid defaulting on offer-in-compromise agreements.

Other aspects of the agency's push to help recession-weary taxpayers include partnering with tax professionals in IRS "Super Saturday" events "to help taxpayers identify and avail themselves of every credit, deduction or benefit for which they may be eligible," Shulman said in his testimony.

Additionally, he said, the IRS is moving to soften the tax burden for financially distressed Americans through an aggressive new Earned Income Tax Credit outreach program designed to reach every taxpayer who qualifies for it.

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