Dealing with the IRS is rarely an enjoyable experience. After all, you may owe them a sizable portion of your earnings each year, and if you fail to pay it, you face some harsh penalties. Additionally, you may have to handle inflexible tax laws, the chance of an audit and the overall stress of dealing with the IRS.
While it may not lower your tax bill, Congress recently passed the Taxpayer First Act, which suggests some important changes in IRS operations that could make your encounters with them a little less painful. It starts with compelling the agency to develop a plan to improve customer service. More importantly, Congress is asking the IRS to make sensible changes to their enforcement of tax codes and to take better precautions to protect your personal information.
How will the changes affect you?
You are not alone if you have ever completed your tax returns only to learn you owe the government more than you can afford to pay. While the IRS offers options for dealing with tax debt, the agency has not always been generous in assisting you and others who are in this situation. If the president signs the Taxpayers First Act into law, you may notice some of the following changes related to tax debt:
- Those low-income taxpayers requesting an Offer-in-Compromise settlement of their debt will receive a waiver of their initial payment and application fee, which is currently optional for the IRS to grant.
- Under certain conditions, innocent spouses whose partners commit tax fraud may be eligible for relief from the penalties more consistently across the states.
- The new law will limit the power of the IRS to seize your property if you structure large transactions to avoid tax ramifications, unless those transactions are illegal, such as money laundering.
- The IRS will no longer use private collection agencies—who may coerce you into a payment plan you can't afford—if you meet certain income requirements.
- The IRS will allow you to use your credit or debit card to pay your taxes instead of a third-party processor, and the IRS must minimize your fees for this service as much as possible.
If you have ever dealt with the complicated and sometimes impenetrable appeals process, you may be relieved to know that the new law, if passed, will make the process more transparent and allow you a better understanding of why the IRS has denied your appeal. Nevertheless, even with these changes in place, you have the option of seeking advice from a Connecticut tax attorney, especially if you are dealing with tax issues that could result in costly or long-term ramifications.