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Tax Time 2008

News, Resources and Advice

Special Report  |  Live Q&A: March 2

IRS Leniency Throws Taxpayers a Lifeline

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By Nancy Trejos
Washington Post Staff Writer
Sunday, February 15, 2009

In its bid to be more lenient this year, the IRS is giving its employees more flexibility in helping taxpayers in financial straits. Employees will have greater authority to temporarily suspend collection in certain hardship cases, especially when the taxpayer has lost a job or is facing a severe illness or large medical bills.

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But some tax experts say leaving such decisions to individual employees can be dangerous. "The worst thing about the civil tax enforcement is that so much of it depends on who has your file, and I'm still seeing aggressive collection practices against small businesses and individuals," said Gerald W. Kelly of the Baltimore law firm Thomas & Libowitz.

Benson Goldstein, senior manager of taxation at the American Institute of Certified Public Accountants, said it is unclear how much relief the approach will bring taxpayers. "How they'll be more lenient to taxpayers . . . we just don't know," he said. "It's too early to tell."

IRS Commissioner Douglas Shulman said his employees are well-trained to handle their responsibilities. "They follow a very tight set of procedures," he said. "That's people's job in an organization, to try to exercise their judgment."

Ultimately, taxpayers will have to be proactive if they want to benefit from the IRS's promised leniency. Those who are behind on payments should call the phone numbers listed on the correspondence they receive from the agency, Shulman said. They can call and say, "I just can't pay this, what are my options?," he said.

In some cases, they won't even have to provide much proof of a hardship.

That's not to say the IRS will be lenient with everyone. Each case will be carefully vetted, Shulman said.

If a taxpayer's request for leniency is rejected, he or she can ask to speak to an IRS supervisor or write a letter requesting reconsideration, Shulman said.

Taxpayers should go to the agency's Web site, http://www.irs.gov, for more guidance. The agency added a section titled "What If . . . ?" addressing a number of problematic scenarios and actions beleaguered taxpayers can take to fix them.

For instance, under the heading "What if I can't pay my taxes?," the agency instructs taxpayers to still file their return on time and pay as much as possible to avoid penalties and interest. The agency then urges taxpayers to call 1-800-829-1040 to discuss payment options, such as installment plans that allow people to pay their full balance over time.

Here are some changes taxpayers should know and ask about:


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