Bay Area Estate And Tax Planning Law Firm

TIGTA to IRS: Fresh Start Initiatives are working, so stop it!

On Behalf of | Feb 17, 2015 | Uncategorized |

When the economy tanked, the IRS proved that the government had a heart. Realizing that taxpayers were having a tough time paying off their tax debt, the agency announced that it would establish new processes and tweaking existing ones to make it a little easier. The program was dubbed the Fresh Start Initiatives.

Sure enough, the IRS made good — in 2011. The agency made taxpayer-friendly changes to the way installment agreements, offers in compromise and Notices of Federal Tax Liens worked. Apparently, it was an emergency, but these things take time.

Nevertheless, many taxpayers were better off because of the Fresh Start Initiatives. The IRS dramatically reduced the number of NFTLs filed against taxpayers owing less than $10,000 between FY 2010 and FY 2013. Streamlined processes helped taxpayers with installment agreements and offers in compromise. Some taxpayers asking for filing extensions were able to avoid penalties.

All of this is according to the Treasury Inspector General for Tax Administration’s recent review of the Fresh Start Initiatives. TIGTA also noted that there were some less effective aspects to the program.

For example, a number of taxpayers were unable to keep up with their direct debit installment plans. As part of the agreement, however, the IRS had agreed to withdraw the NFTLs. TIGTA discovered that the IRS had not refiled the NFTLs after the taxpayers had defaulted.

If the agency had missed a handful of notices, TIGTA may not have brought it to anyone’s attention. Unfortunately, the number of taxpayers topped 500; their total tax debt ran to about $10.5 million.

While the IRS has agreed to review those cases and file new notices if appropriate, everyone at the agency is not in lockstep with TIGTA. The commissioner of the IRS Small Business/Self-Employed Division argued that the notice actually had nothing to do with the lien.

We will explain in our next post.

Source: Accounting Today, “IRS Fresh Start Initiatives Come under Scrutiny,” Michael Cohn, Feb. 11, 2015