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IRS Leniency Program

There’s a report out this week about the IRS offering a leniency program for people who have paid their taxes on time and in full in the past but find themselves in a financial bind this year. While the details aren’t clear, it sounds like they will simply be more willing to work with people on repayment plans as people face a myriad of problems like job loss or a reduction in income.

“We need to recognize that it’s an extraordinary, challenging time,” Shulman said in an interview. “We need to understand the taxpayers’ perspective. We need to walk a mile in their shoes.”

I’ve been fortunate enough to have worked, and paid taxes, in a time of great prosperity so I don’t know if the IRS has done this in the past but I applaud them for it. This type of flexibility and pragmatism is not something I associate with the government, let alone an organization often viewed as draconian. Even Ellis Reemer, head of tax litigation at law firm DLA Pipe, cited in the article, thought this program was extraordinary.

What if you can’t pay? Here’s what the IRS says [3]:

Don’t panic. If you cannot pay the full amount of taxes you owe by the April deadline, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. You also should contact the IRS to discuss your payment options at 1-800-829-1040. The agency may be able to provide some relief such as a short-term extension to pay, an installment agreement or an offer in compromise. In some cases, the agency may be able to waive penalties. However, the agency is unable to waive interest charges which accrue on unpaid tax bills.

So pay what you can, then call to see what you can do. In fact, if you think you can’t pay in full come April 15th, call them today.

Source: IRS agents soften heart for delinquent taxpayers [4] [AP]