Taxpayers In Financial Trouble Need Understanding From IRS

07 Jan Taxpayers In Financial Trouble Need Understanding From IRS

The National Taxpayer Advocate is taking the position that IRS collection officers need to consider all alternatives in working with down on their luck taxpayers. Congress established the Taxpayer Advocate program as part of the Internal Revenue Service Restructuring and Reform Act of 1998, legislation often referred to as the “Taxpayer Bill of Rights III.” The National Taxpayer Advocate is required by law (IRC Scetion 7803(c)(2)(B)(ii) more specifically) to report to Congress each year and identify the most serious problems experienced by taxpayers in dealing with the Internal Revenue Service.

As part of its recently released 2008 report to Congress the National Taxpayer Advocate criticizes the IRS for a continuing failure to properly use alternatives to enforced collection when dealing with a delinquent taxpayer. Because the IRS has been given such powerful tools by Congress to use for collection of tax, it must exercise caution in taking a “hard line” with enforcement. The use of federal tax liens, levies and the seizure of property can cause undue economic hardship for taxpayers and should be avoided when other alternatives are possible.

In its report, the Taxpayer Advocate argues that the current aggressive collection strategy being employed by the IRS Collection Division will create more problems than it resolves. In addition to worsening the current financial difficulties of many American taxpayers, the Taxpayer Advocate argues that aggressive enforced collection tactics actually produce less revenue than installment payment agreements and settlements with taxpayers.

Because the economy is suffering significant difficulties, the IRS must balance a need for enforcement with a close eye to protection of taxpayer rights. Taxpayers face additional financial stresses including home foreclosure, unemployment and commercial debt collection. The Taxpayer Advocate points out that the promotion of long-term voluntary compliance is a basic goal as set forth in IRS policy statements. With a view to future voluntary compliance it is clear that the use of enforced collection such as seizure of assets to resolve past due taxes should be the last option for the IRS in the collection process.

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I was admitted to practice in 1978. I am certified as a Consumer Bankruptcy Specialist by the American Board of Certification. I regularly speak on tax and bankruptcy issues at state, regional and national conferences. Years of experience in practice before the Internal Revenue Service and Oregon Department of Revenue have given me the background to resolve a large variety of consumer tax issues.
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