IRS Eases Tax Debt Resolution Process

Last updated on July 15, 2013

For 2013, the IRS has simplified the tax debt resolution process for the two most commonly used tax debt resolution methods, the Installment Agreement and Offer in Compromise programs. Taxpayers who fulfill the eligibility requirments for these tax relief programs will find it simpler to pay their tax debt.

The IRS has also increased the threshold for filing a federal tax lien. The threshold has been increased from $5,000 to $10,000. However, that does not mean that the IRS has no power to place a lien on amounts less than $10,000.

Taxpayers who are paying their tax debt under an Offer in Compromise will now see more flexibility when the IRS is considering their ability to pay, less requests for additional information and with determining equity in assets and allowable living expenses. Processing requests and payment processes have also been made simpler and faster.

In 2011, the IRS also offered penalty relief for the failure-to-pay fine. The IRS makes such offers from time to time. Under many similar offers, the IRS refrains from placing a tax lien, introduces flexibility in the resolution process, and provides relief from penalties.

These efforts by the IRS are made to encourage taxpayers to resolve their tax debt. For those yet to resolve their back taxes, this might be the right time.