With the IRS receiving close to 137 million individual tax returns this past tax season, resulting in about 96 million refunds issued to taxpayers, the tax system as a whole may be working for some taxpayers, but it isn’t working for millions of others. When it comes to enforcement, not many would question the capabilities of the IRS to operate on all cylinders. However, when it comes to providing support and services to the millions of American taxpayers, the IRS may be falling short.
Most Americans feel their hands are tied when it comes to advocating for their own taxpayer rights. The Taxpayer Advocate Service (TAS) was created to alleviate that for the American taxpayer. With taxes presenting a financial hardship for many, the Taxpayer Advocate Service recognizes the key challenges facing the IRS relative to supporting the American taxpayer and makes recommendations on how the IRS best can serve the American taxpayer.
While the systems used for collection by the IRS may be sophisticated enough to ensure every American is held accountable for every penny they owe; the system lacks the sophistication to understand the financial viability of the individual taxpayer. To the IRS this means that whether you just bought your fourth mansion or are facing foreclosure, you are one in the same in the eyes of Uncle Sam. The Internal Revenue Code and the IRS’s own procedures are governed by rules designed to protect those taxpayers that are the most financially vulnerable. The IRS doesn’t screen taxpayers for their ability to pay before it takes collection actions. It is up to the individual taxpayer to notify the IRS of their financial hardship, yet most of these taxpayers aren’t aware of their taxpayer rights, nor where to even start. The result? Of the 2.1 million payment agreements issued by the IRS in 2018, close to 40 percent of those were sent to taxpayers falling below their allowable living expenses threshold. Not surprisingly, those taxpayers defaulted on their payment nearly seven times more often than taxpayers with higher incomes, perpetuating their financial hardship.
“The IRS collection system favors knowledgeable taxpayers who understand how to request collection alternatives, and at least in relative terms, discriminates against taxpayers who don’t have that knowledge,” says Nina Olsen of the Taxpayer Advocate Service. The good news is there are simple, easy ways even the most financially challenged can proactively navigate the seemingly complex system of the IRS.
If you need help reaching a tax relief agreement with the IRS, an expert like Optima Tax Relief can be a valuable resource to help resolve your IRS debt.