The IRS helps taxpayers make a “Fresh Start”

October 28, 2012
Georgene

The IRS helps taxpayers make a “Fresh Start”

 

Today as I was perusing  the IRS website, something I actually enjoy doing, I ran across an article that describes how the Internal Revenue Service has expanded its “Fresh Start” initiative by offering more flexible terms to its Offer-in-Compromise (OIC) program.  How it works is the IRS looks at the taxpayer’s assets to determine what can reasonably be collected.  At which time the liability can be paid in full in a lump sum or through a payment agreement.  It more than likely will not be the full amount owed, hence the term Offer-in-compromise.

There are four changes listed in the article:

1.  The calculation used to determine the taxpayer’s future income is reduced to one year  vs four for offers paid in five or fewer months; two years vs five years for offers paid in six to twenty four months.

2.  Taxpayers may repay their student loans minimum payments guaranteed by the federal government.

3.  Taxpayers may pay state and local delinquent taxes – monthly payments are allowed in some cases.

4.  The Allowable Living Expense incorporate average expenses for basic necessities for citizens in similar geographic areas.  Taxpayers can us the allowance to cover expenses such as credit card payments.

It seems the bottom line is that the IRS is willing to work with the taxpayer in order to collect what is owed and will work with the taxpayer within certain guidelines.  This is potential good news for the taxpayer who may owe taxes.

You can read the article yourself by clicking on this link:  http://www.irs.gov/uac/More-Flexible-Offer-in-Compromise-Terms-Help-Taxpayers-Make-a-Fresh-Start

One key way to avoid owing taxes is to keep excellent financial records and to report your earnings, with-holdings, deductions, and expenses accurately on your Federal tax return.  This can be done by hiring an experienced bookkeeper to keep records straight for you.

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