Report Finds IRS Helping Distressed Taxpayers

The Internal Revenue Service has indeed been taking steps to assist economically distressed taxpayers who have fallen behind on their payments, a government report confirmed.

The report, by the Treasury Inspector General for Tax Administration, evaluated whether the IRS effectively implemented provisions to help economically distressed taxpayers having difficulties paying their balance-due accounts.

TIGTA found that the IRS communicated components of its Economic Challenges Action Plan, including added flexibility for missed payments; additional review of home values on offer-in-compromise cases; postponement of collection actions; prevention of offer-in-compromise defaults; and expedited levy release.

“Overall, the IRS effectively implemented options to help taxpayers facing economic difficulties,” said TIGTA Inspector General J. Russell George in a statement.

However, the IRS may have gone a little too far, and inadvertently gave some individual taxpayers an additional payment skip on installment agreements. When taxpayers miss a scheduled payment, the IRS previously allowed 30 days to pass before terminating the installment agreement. Beginning in January 2009, the IRS allowed taxpayers a total of two skipped payments, or 60 days. Between Jan. 31, 2009, and July 18, 2009, 615,197 taxpayers received the additional skip. However, TIGTA found that some taxpayers received more than one additional skip.

Separately, another TIGTA report issued Thursday found that IRS collection employees adhered to Fair Tax Collection Practices between January and September of last year, meaning there were no confirmed cases in which they used abusive or harassing behavior toward taxpayers when attempting to collect taxes. During that period, there were no cases involving FTCP violations for which an IRS employee received administrative disciplinary action and there were no taxpayers who received civil damages for an FTCP violation.

The IRS coded only three cases as FTCP complaints; however, two cases were not substantiated as FTCP violations and the other was improperly coded as an FTCP case. TIGTA recommended the miscoding be fixed during the audit and the IRS corrected the miscoding. In addition, there were no civil actions resulting in monetary settlements being paid to taxpayers because of an FTCP violation.