WASHINGTON Feb 24 The Internal Revenue Service
is going to go easier on taxpayers who owe money, its
commissioner said on Thursday.
"We are making fundamental changes to our lien system and
other collection tools that will help taxpayers and give them a
fresh start," Doug Shulman told reporters. "I always encourage
our employees to try to walk in the taxpayer's shoes."
He said the agency would immediately double, from $5,000 to
$10,000, the size of tax bill which could trigger a lien, in
which the agency takes over a taxpayer's property to cover
In other moves made effective immediately, the IRS will
allow lien withdrawals for taxpayers who enter direct debit
agreements with the IRS and will broaden eligibility for offers
in compromise, in which the IRS agrees to reduce a taxpayer's
bill in exchange for payment. It will also make it easier for
more small businesses to enter into installment agreements to
pay their tax bills.
The announcement came after complaints that the IRS has
been heavy-handed in going after taxpayers who owed money, even
in cases where recession-hit taxpayers had no real assets or
income with which to pay their tax bills.
Some of those complaints had come from the agency's own
independent taxpayer advocate, Nina Olson.
"IRS lien policies are all about 'protecting the
government's interest' and don't consider the impact of the
taxpayer," she recently wrote in a report to Congress.
"By filing a lien against a taxpayer with no money and no
assets, the IRS often collects nothing, yet it inflicts
long-term harm on the taxpayer by making it harder for him to
get back on his feet when he does get a job," she said in the
The IRS had stepped up its imposition of tax liens in
recent years, filing against 1.1 million taxpayers in fiscal
year 2010.That's a five-fold increase from fiscal 1999, when
168,000 liens were filed.
Shulman said he expects the number of liens to fall, thanks
to an improving economy and new measures that are more taxpayer
The IRS will double, to $100,000, the annual income
threshold for taxpayers permitted to enter offers in
compromise, Shulman said. He said the agency will allow
taxpayers who enter those compromise deals to keep making their
car payments. "I would expect to see acceptances and the number
of people getting offers in compromise increasing," he said.
The IRS also will allow small businesses with as much as
$25,000 to enter into streamlined installment agreements to pay
their tax bills. That threshold had been $10,000.
(Reporting by Linda Stern; Editing by Bernadette Baum)