Tuesday, February 3, 2009

A "kinder, gentler" IRS?

Call it a reflection of the times, but the New York Daily News is reporting that the IRS has promised to go easy on the nation this year in relation to filing taxes. Seems like a first, but we like firsts -- especially during the recession. The words "IRS" and "kind" have never been synonymous. The stereotype of the hard-as-nails, unmerciful IRS agent exists for a reason, after all.

It turns out the IRS actually does have a heart, and understands what the majority of U.S. citizens are going through, what with so many layoffs and foreclosures budding on a daily basis. No they aren't forgoing collection of taxes this year (wouldn't that be grand?); instead, they'll be more flexible with tax collection to help easy the fiscal burden that's cloaked the shoulders of so many of us.

The only catch is that you have to ask for help if you need it. Though the IRS may have gone the way of the Tin Man, it doesn't mean it's also gone the way of the all-knowing Oz. Struggling to pay your monthly bills and need a filing extension? Just lost your job and have no savings to pay taxes? Ask and you (probably) shall receive help.

The Mail reports that among the changes this year:
  • IRS employees will have greater authority to suspend collection actions — such as tapping your bank account — in certain hardship cases.
  • If you already agreed to an installment plan with agency and have been paying on time but now face trouble, the IRS might allow you to skip a payment or pay a reduced monthly amount without voiding the agreement.
  • If you thought you weren’t eligible for a so-called offer in compromise — in which a taxpayer and the IRS agree to settle a tax debt for less than the full amount — you may be now. In the past, if you had enough equity in your home to cover your tax debts, you may have been turned down. But given the downdraft in real estate, the IRS is willing to take a second look.
The IRS' website (www.irs.gov) has an excellent list they call the "What Ifs of an Economic Downturn." On the list are many common hypothetical questions posted to the bureau, and their answers to each. Questions include: What if I lost my job? What if my income declined? What if I sell my home for a loss? What if I can't pay my taxes? Scary questions, but the IRS is anticipating them being asked and have answers for all of them. It's an excellent resource to tap in to if you're freaking out about tax season and feel fiscally pinned against a wall.

If these "What Ifs" don't answer your questions though, IRS.gov also has a phone number you can call for help (1-800-829-1040) and a list of tax assistance offices that you can visit in person.

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