Watchdog: IRS tormenting taxpayers
Liens for unpaid taxes rose 14% last year. The IRS says it gives people ample chances to pay, but advocate decries practice.
This article is by Stephen Ohlemacher of The Associated Press.
A government watchdog says the Internal Revenue Service is tormenting struggling taxpayers in the midst of a slumping economy by increasing the number of liens the agency has filed against people who owe back taxes.
The IRS filed nearly 1.1 million liens in the budget year that ended in September, a 14% jump over the previous year. Liens punish taxpayers and often hurt their ability to pay back taxes, National Taxpayer Advocate Nina E. Olson said Wednesday in her annual report to Congress.
"By filing a lien against a taxpayer with no money and no assets, the IRS often collects nothing, yet it inflicts long-term harm on the taxpayer by making it harder for him to get back on his feet when he does get a job," said Olson, an independent watchdog within the IRS. "Absent data that show liens make a meaningful contribution to revenue collection and especially in this economy, I find it unacceptable that the IRS continues to torment financially struggling taxpayers in this way."
The IRS responded that liens are not filed until taxpayers are given numerous opportunities to pay their tax bills, or sign up for payment plans.
IRS spokeswoman Michelle Eldridge said the agency has taken steps to help taxpayers facing financial problems, including increased flexibility in installment agreements and other collection efforts.
"The IRS recognizes that many taxpayers are struggling financially," Eldridge said. "The IRS has taken numerous steps to help taxpayers facing tough times in the past two years."
Each year, Olson reports to Congress on the issues she deems important to administering the tax code. This year, Olson highlighted collection efforts, the complexity of the tax code and the need for tax reform, and the challenges facing the IRS in implementing the new health care law.
Liens give the federal government a claim on property to help secure payment of back taxes. They are filed publicly for tax debts that are deemed uncollectable, alerting creditors and others that taxpayers owe back taxes.
Olson criticized the IRS policy of automatically issuing liens in some cases. According to Olson's office, a lien is automatically filed if a delinquent tax debt exceeds $5,000, unless a collection employee gets a supervisor's approval not to file it.
IRS spokesman Terry Lemons, however, said taxpayers get multiple opportunities to apply for an extension, enroll in a payment plan, or even apply for a program that allows some taxpayers to pay less than the full amount they owe.
"Before you get to a lien, you're going to have many communications from the IRS," Lemons said. "You'll have multiple opportunities to talk to us."
Olson has criticized the use of tax liens in the past, and said the response from the IRS was inadequate. The number of liens filed last year was more than five times the number filed in 1999, Olson said in her report.
However, Eldridge said the statistic is misleading because the number of liens dipped in 1999 because the agency was going through a massive restructuring mandated by a 1998 law.
"A better metric is comparing the current lien level of 1.1 million to earlier levels in the 1990s," Eldridge said. "The number of liens routinely topped 750,000 each year, and reached 1.4 million in 1992."
Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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Funny thing is that if the IRS owes you money they can just keep sending you letters stating they are reviewing the status. I have a friend that qualified for the long time homeowners tax credit. They filed their return last April. They have faxed over 30 pages of documentation and finally had to get an account involved to ge the IRS to "approve" the documentation for the $6,500.
the IRS waited 90 days (July 8th) before sending out the first letter stating :We are reviewing your case, we will contact you if more information is needed." 90 days (around Sept 12th) later the second letter arrived stating "We need more documentation." She faxed the information to then and made a follow-up call. During the follow-up call she was told "Your return goes to the bottom of the stack of cases we are reviewing, it will be about 6-8 weeks before your return is reviewed again. A week before the 8 weeks was up, she received a letter stating that they needed another 30 days to review the information. Then she received a denial letter, without a reason why it was denied. She called in once again and the person she spoke to says " I can see where you did live in the house for the required number of years, but your paid tax receipts are not enough proof that you owned the property!
She then got an accountant involved you got the IRS to agree that she did qualify, however most of the IRS staff was taking two weeks off for the Christmas Holiday and her case would be looked at and okayed when they returned in January. January 7th the accountant was notified that it would take another 3 weeks to have the check processed and sent.
It doesn't sem right that they can file a lien during these tough economic times but the IRS just has to send a form letter and they aren't held accountable.
I have been unemployed for over 2 years, make 202.00 per week on unemployment, and I'm supposed to ask for a payment plan? And pay with what? I have not been to a Dr. or dentist in over 2 years, I cannot ask for financial assistance from family or friends, they are either in the same boat, nearing it or have done all they can for me given that I no longer can even say that I'll pay them back when I find work. Find work? Get real, with my poor credit score I doubt Wendy's would hire me to take out the garbage. Ask for a payment plan? What for? I don't have a pot to piss in or a window to throw it out of but I still owe the IRS and they want their money. Now.
You who have jobs and can afford to pay your taxes? Good for you Restore. What do you want a medal or a chest to pin it on?
As far as the interest goes, it is CAPITALIZED. The interest is calculated daily and added to the principle ON A DAILY BASIS.
How can anyone expect to dig themselves out of a whole like that. The IRS is worse than any mob bookie you'll ever meet.
Also, if the IRS garnished your wages they can take up to 75% of your disposable income. That means you get paid, your employer takes out federal, fica, state and local taxes and then the IRS gets 75% of what's left. THEN if there's anything left you can pay your medical premiums, 401K, etc. Yeah, sure, you can claim hardship but your idea of hardship & the IRS's idea of hardship is completely different.
As for the IRS agents being nice. Yeah, they're usually pretty nice, but the shark smiled at me too!
I have never heard on any news outlet about the supposed tax missteps by Geitner or Rangel being charged, fined, jailed or punished. What would happen to any of us under like circumstances? That matches my theory that no one in government works at their job and are exempt from having to live our real life.
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