As many taxpayers continue to struggle with a tough economy, tax season is finding many of them literally unprepared.

The IRS reported Tuesday that the overall number of tax return filings has declined so far this season, as of March 12, compared to the same period a year ago (see Tax Return Filings Are Down So Far This Season). The IRS is trying to encourage more people to get their taxes done no matter what their situation this tax season, offering help especially to taxpayers coping with unemployment and other financial difficulties.

The agency is expanding efforts that began last year to provide additional flexibility in its offer-in-compromise program for helping struggling taxpayers settle their tax debts. It’s also holding a series of “open houses” on Saturdays in which taxpayers can work out their tax problems face to face with IRS employees.

But some observers are skeptical of these efforts. The IRS has been under great pressure to step up its tax enforcement efforts, especially as the federal government sinks further into debt. With tax revenues hit heavily by the economy, the agency has been targeting more individuals and companies that earn foreign income and hold bank accounts abroad, as well as wealthier taxpayers who presumably can afford to pay more. Yet inevitably the agency’s enforcement efforts have also been reaching those who have been hurt by the economy. The service has needed to find a balance between tough-mindedness and compassion, and that clearly hasn’t been an easy adjustment.

Last year, the IRS increased the number of tax liens by 26 percent over the prior year to 965,619, the Baltimore Sun reported. In addition, the number of offers in compromise essentially remained flat last year, even as demand increased by 18 percent. While the IRS received about 52,000 requests to settle tax debts, it approved just 11,000.

During last weekend’s Congressional debate over the health care reform bill, Republican lawmakers repeatedly warned of plans to hire 16,000 to 17,000 more IRS agents to enforce various provisions of the bill, with the IRS budget going up $10 billion over the next 10 years.

It isn’t clear where the numbers come from, but the specter of IRS agents checking to make sure that taxpayers have been keeping up with their health insurance payments and not claiming tax credits for insurance they don’t buy was clearly worrisome enough to make it a popular talking point during the debate. At least 14 Republican attorneys general in various states have announced plans to block various provisions of the health care reform bill. If they succeed in pre-empting federal law, or in getting parts of the bill repealed, that may reduce some of the need for extra enforcement of provisions like the individual mandate to buy health insurance.

The IRS no doubt will play a large role in enforcing the various tax provisions of the bill, and in providing guidance and regulations for carrying them out. However, the agency will need to make sure that while it dispenses tax breaks and collects taxes related to the health care overhaul, it also provides a measure of compassion and evenhandedness. In the years ahead, U.S. citizens will be dealing with a complex new set of options and requirements. They will need both the IRS and their tax preparers to help them adjust.

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