In my last blog, I encouraged folks who were behind in filing taxes to take it one step at a time and get it done. As if they were reading my mind, the IRS has just announced that they have modified their policies and programs to help people pay back taxes and avoid tax liens. IRS Commissioner Doug Shulman said that “these steps are good for people facing tough times, and they reflect a responsible approach for the tax system.” I agree and thought I’d outline the changes which include:
Increasing the amount of tax liability that triggers the IRS to file a lien. The IRS files a lien to secure their priority rights to the property of taxpayer over other creditors. A lien can affect your credit rating, so it is a good idea to get the taxes paid as soon as possible and get the lien withdrawn.
Modify procedures to make it easier to obtain lien withdrawals. Once you pay, there is now a streamlined process to get the liens withdrawn. In addition, the IRS will now allow lien withdrawals when you enter into a Direct Debit Installment Agreement. Sounds fancy, but basically, it’s just an automatic payment from your bank account to the IRS on (typically) a monthly basis.
Streamline installment agreements for small businesses. A small business can generally participate in installment agreements if they have a tax liability less than $25,000 – this used to be $10,000. Typical installment agreements give a small business 24 months to pay and usually require a Direct Debit Installment Agreement.
Streamline the Offer in Compromise program. This program allows the IRS to settle tax liabilities for less than the full amount owed. The program has been expanded to taxpayer’s with annual income less than $100,000 and tax liability of less than $50,000. There are many steps in getting your taxes settled, but these changes give more taxpayers the opportunity.
The IRS has just offered a bit a hope with these changes. So take advantage of it and take care of those back taxes!