Tuesday, January 6, 2009

If your turnip is bleeding...

The Internal Revenue Service said Tuesday it understands if you are strapped for cash during the filing season beginning later this month.

Make no mistake, IRS wants its money, but it will try to be more flexible about getting it, Commissioner Doug Shulman said in a telephone press conference. If, in tax preparer lingo you are "previously compliant," and always avoided tax problems before, IRS will do what it can to accomodate you, Shulman said.

Further details about change - along with a reminder of some the latest changes in deductions, exemptions and other important minutiae that income tax wonks revel in - were posted to the IRS Web site this afternoon. Highlights are in the top center of the first page you come to.

But here are the five biggest changes Shulman outlined to help taxpayers who've been beaten up by the recession.

First, IRS employees have been told to suspend collection actions in cases where a taxpayer simply cannot pay his or her taxes because of a job loss or similar economic calamity.

Second, if you are already paying old tax bills on an installment plan, IRS won't automatically scotch the agreement and demand all its remaining money if, for reasons beyond your control, you miss a payment. Third, if you are paying your taxes through what's known as an offer in compromise - basically settling for less than 100 cents on the dollar - IRS won't scrap that agreement either if you miss a payment.

Fourth, if you seek an offer in compromise, but are rejected because you have enough equity left in your home to pay your tax bill, you can ask for a special IRS unit to review that rejection. It will check out home prices in your area to see if the decision can be changed.

And finally, if the IRS has put a levy on any of your property or assets to collect back taxes, once those are paid, the service will speed up the paperwork needed to give you full access to what's left.

But remember, you need to ask for this help if you need it. And to do that, you need to file a return, call the IRS toll free number 1-800-829-1040 or go to a nearby walk-in taxpayer assistance office.

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