Attention FAE Customers:
Please be aware that NASBA credits are awarded based on whether the events are webcast or in-person, as well as on the number of CPE credits.
Please check the event registration page to see if NASBA credits are being awarded for the programs you select.

Taxpayer Advocate Says Too Many Stuck in Unaffordable IRS Payment Plans

Chris Gaetano
Published Date:
May 30, 2019

While the law says that the IRS must cease collections on delinquent taxpayers if payment plans would push them into economic hardship, National Taxpayer Advocate Nina Olson said this has not been the case for far too many people, whom she said the government essentially sets up to fail by placing them in unsustainable payment plans, according to MarketWatch

Her own office's research found that about 40 percent of taxpayers on installment repayment plans in 2018 earned less than the IRS's estimation of their living expenses, and of those individuals, 39 percent wound up defaulting on their plans. The taxpayer advocate said that the IRS needs a better way of calculating what would and would not count as economic hardship. The IRS, in a statement, said that taxpayers have opportunities to challenge the reasonableness of their repayment plans, and further, the staff is very well trained in making the appropriate estimates but, at the same time, the agency conceded that it can't reliably determine economic hardship based solely on the information available in IRS and third-party databases, which is often incomplete. 

In the past few years, IRS enforcement activity has been increasingly focused on those in the middle and lower income brackets. In 2015, tax audit risk for families earning less than $100,000 a year had increased by 17 percent. At the same time, the IRS has focused less and less on high earners: data from last year indicated that, of the 504,278 returns filed from individuals worth $1 million or more last year, 16,305 were audited, the lowest it has been in close to a decade. Faced with repeated budget cuts, the IRS has found that collecting from a smaller number of wealthier individuals who hide their income overseas or in complicated partnerships, and can afford robust legal defenses, is much more difficult than going after larger numbers of poorer individuals who are less likely to fight. 

Click here to see more of the latest news from the NYSSCPA.