In 2009, in response to the troubling economy, the IRS announced that it was going to be more lenient on taxpayers who are unable to pay the taxes they owe. This may include those who have recently lost their jobs, are relying heavily on Social Security benefits, or are facing severe medical costs. The program is geared for those who have paid their taxes in the past and are facing a financial hardship. In these cases, the collection activities, including notices, phone calls, levies, seizures, and penalties, can be deferred. This allows those going through a tough period some time to catch up by suspending collection efforts. Leniency is granted on a case-by-case basis and it is extremely important to approach it carefully and strategically with a former IRS Tax attorney.
In 2011, the IRS announced the new steps it was taking to help people meet their tax obligations, without the unnecessary burden to taxpayers. The policy is to help taxpayers pay back taxes and avoid tax liens. These changes include: increasing the dollar threshold when liens are generally issued, resulting in fewer tax liens; making it easier for taxpayers to obtain lien withdrawals after paying a tax bill; withdrawing liens in most cases where a taxpayer enters into a Direct Debit Installment Agreement; creating easier access to Installment Agreements for more struggling small businesses; expanding a streamlined Offer in Compromise program to cover more taxpayers. When there is a failure to pay a tax liability after notice and demand, a lien is attached to the taxpayer’s property and rights to property. The IRS can seize and sell property subject to a federal tax lien. The IRS now says it will file liens only if tax debts are $10,000 or more, double the previous threshold. The IRS will also try a lien “withdrawal”, which means that the lien will not stay on record for years. The new installment agreements will also allow up to 24 months to pay the tax debt of $25,000 or less. Also, the IRS’ new streamlined offer program will welcome taxpayers with annual incomes of up to $100,000 and tax liabilities under $50,000.