Academic journal article Journal of Accountancy

Let's Make a Deal

Academic journal article Journal of Accountancy

Let's Make a Deal

Article excerpt

The Internal Revenue Service reported that recent changes in its collection policy were prompting taxpayers to cooperate with the government.

Since early 1992, the IRS has made it easier for taxpayers to set up installment payment plans. The service also has been more receptive to offers in compromise--settlements involving less than the full amounts owed. According to internal revenue news release IR-93-45, the number of taxpayers with installment agreements and accepted offers in compromise increased more than 30% in the last year.

Installment agreements have always been the most popular way of paying back taxes. The IRS has allowed more of its employees to accept such agreements, including those working in Taxpayer Services and Examination. For most debts under $10,000 it no longer requires taxpayers to give financial statements and does not file tax liens.

According to the service, 97% of individuals who owed taxes each had a total debt under $10,000. However, to take advantage of the new policies these taxpayers not only had to make their installment payments but also had to meet all tax obligations on time for the agreement's duration.

For those who can pay something but won't ever be able to pay their entire tax debt, the IRS has provided another alternative, offers in compromise, which have been on the books for years but were rarely used because of IRS resistance. …

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