IRS softens lein, back-tax payment policies

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The Internal Revenue Service has changed its policies, to help make it easier for small business owners and individuals to pay back taxes and avoid tax liens.

The IRS has modified its use of tax liens and some of its collection methods – including its offer-in-compromise program and installment payment plans.

IRS Commissioner Doug Shulman announced the changes today to the IRS’s lien filing practices, which are intended to lessen the negative impact to taxpayers.

Changes include:

• Creating easier access to installment agreements for more struggling small businesses.

• Significantly increasing the dollar threshold when liens are generally issued, resulting in fewer tax liens.

• Making it easier for taxpayers to obtain lien withdrawals after paying a tax bill.

• Withdrawing liens in most cases when a taxpayer enters into a direct debit installment agreement.

• Expanding a streamlined Offer in Compromise program to cover more taxpayers.

“People will have a better chance to stay current on their taxes and keep their financial house in order. We all benefit if that happens,” Shulman said.

The lien threshold was raised to keep pace with inflation. That change, Shulman said, means tens of thousands of people won’t be burdened by liens.

Small businesses with $25,000 or less in unpaid tax can participate in the installment agreements. Prior to this, only small businesses with under $10,000 in liabilities could participate. Small businesses will have 24 months to pay.

“By expanding payment options, we can help small businesses pay their tax bill while freeing up cash flow to keep funding their operations,” Shulman said.

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