The Internal Revenue Service (IRS) has announced help for taxpayers who are struggling to pay their personal and small business back-taxes. The intent, the IRS announcement on Thursday stated, is to “help individuals and small businesses meet their tax obligations, without adding unnecessary burden to taxpayers.”
The IRS is “significantly increasing” the dollar amount beyond which the IRS would attach liens to taxpayers’ assets; making liens easier to remove after the tax is paid; and generally withdrawing a tax lien if the taxpayer agrees to a “Direct Debit Installment Agreement (DDIA).”
The IRS also says it will make “Installment Agreements” more accessible for small businesses, and expand its “Offer in Compromise Program.”
“We are making fundamental changes to our lien system and other collection tools that will help taxpayers and give them a fresh start,” IRS Commissioner Doug Shulman said in the release. “These steps are good for people facing tough times, and they reflect a responsible approach for the tax system.”
The point at which a lien would generally have been placed on taxpayer assets was $5,000. Now it will be $10,000, IRS spokesperson Dean Patterson told AdvisorOne.
“The new dollar amount is in keeping with inflationary changes since the number was last revised. Currently, liens are automatically filed at certain dollar levels for people with past-due balances,” the announcement stated.
Doubling the threshold is significantbecause, according to the release, “A lien informs the public that the U.S. government has a claim against all property, and any rights to property, of the taxpayer. This includes property owned at the time the notice of lien is filed and any acquired thereafter. A lien can affect a taxpayer's credit rating, so it is critical to arrange the payment of taxes as quickly as possible.” Once the tax is paid in full the IRS will “withdraw” the lien “if the taxpayer requests it,” the release said.