IRS Revises Collection Standards

The IRS has posted revised standards on its website which are effective for financial analysis conducted on or after March 1, 2011. If the facts and circumstances of a taxpayer's situation indicate that the standards are inadequate to provide basic living expenses, the IRS may allow the actual amount spent. Collection financial standard amounts are used to help determine a taxpayer's ability to pay a delinquent tax liability.

Taxpayers are allowed the national standards amount for food, clothing, and other items for their family size, without questioning the amount actually spent. Taxpayers and their dependents are also allowed the national standards amount for out-of-pocket health care expenses on a per person basis, without questioning the amount actually spent. Maximum allowances for housing, utilities, and transportation, known as the local standards, vary by location. In most cases, the taxpayer is allowed the lesser of the amount actually spent or the local standard.

IRS Makes Changes to the Lien Process

In an effort to help struggling taxpayers, the IRS has made changes to their lien system and other collection tools. The changes include:

• 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 where a taxpayer enters into a direct debit installment agreement.

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

• Expanding a streamlined offer in compromise program to cover more taxpayers.

More information can be found in IR-2011-20

President Signs Law Repealing Business Tax Reporting Mandate

President signs Bill repealing 1099 reporting requirement for all businesses.