Recent Tax Settlement Announcements: IRS Commissioner Doug Shulman recently announced that the IRS is loosening it's rules for negotiating Tax Settlements (Offer in Compromise) to allow taxpayers hit by the recession to pay less than they owe.
Why the change? IRS Commissioner Doug Shulman claims that IRS Agents will be more lenient for those who have had a drop or loss of income due to the current economic recession.
The IRS will process over 100 million tax returns this year, and most people who file will qualify for Tax Refunds. However, with the loss of more than 8 million jobs since the start of the U.S Economic Recession, many taxpayers will not be able to make payments toward their tax debt.
But is it true? This goes along with what the IRS announced last year. There was talk of a "kinder" and "gentler" IRS all while they ramped up their collection efforts behind the scenes. If the IRS is trying to have more mercy, why do I keep getting hundreds of emails and calls from taxpayer that needs help fighting the IRS?
About Tax Debt Settlements: These new announcements might give people the wrong idea about Tax Debt Settlements. I want to go ahead and rebuke some of the common myths surrounding Tax Debt Settlements, actually known as an IRS Offer in Compromise.
1. First of all, less than 1% will qualify for "Pennies on the Dollar" settlement amounts proclaimed by shady tax companies and as seen in commercials.
2. Second, it's very hard to qualify for an Offer in Compromise at all. Only those who truly cannot afford to pay the IRS even in installments will qualify to have a Tax Debt Settlement with the IRS.
3. Third, unemployment alone will not help you qualify to Settle your Tax Debt with an Offer in Compromise. The IRS will evaluate your financial situation, they will predict the amount of money you stand to make when you become employed again.
I'm not convinced by the IRS's sudden announcement that they will make Tax Settlements easier for taxpayers in need. I think they'll continue to do the same thing they always have, fiercely collect no matter what that means to taxpayers.