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Easy Street

Check out the IRS' new options for tax-debt management. You'll drive away happy--and compliant!

If the "new and improved" IRS doesn't impress you much, take another look. Changes are taking place that are designed to make it easier to pay the taxes you owe.

The IRS still expects all taxpayers to pay their taxes on time each year, and it still charges interest and penalties if you fail to do so. Nothing new there. But if you find yourself in a real financial bind, there are a few payment options that have recently been changed a bit to make them more customer-friendly.

In fact, the IRS, feeling pressure from lawmakers to be nicer to taxpayers, is reportedly going a bit easier on the collection of unpaid taxes. Take a look at recent IRS statistics: In the nine-month period ending July 31, 1999, the IRS seized property to satisfy overdue taxes only 180 times, down from 2,193 seizures in a comparable period one year earlier. Garnishments of paychecks and levies of bank accounts in the later nine-month period fell to 488,834, down from 2.8 million one year earlier. Liens, which are what the IRS claims against property, went from 331,843 in the previous nine-month period to 143,747.

A recent check with a number of tax collectors around the country by The New York Times attributes these declines in part to a provision in the IRS Restructuring and Reform Act of 1998 that says IRS workers will be fired if they willfully abuse taxpayers or violate their rights. These unnamed tax collectors say they have become less aggressive in collecting unpaid taxes because they fear losing their jobs due to the new law's restrictions.

Another contributing factor, according to analysts, is the fact that the IRS has shifted large numbers of employees from enforcement activity to taxpayer assistance. Many are in the midst of time-consuming computer training designed to help them do their jobs more effectively, says Elliott H. Kajan, a principal with Beverly Hills, California, law firm Kajan Mather and Barish. Kajan specializes in tax-controversy matters.

IRS commissioner Charles Rossotti responded to the news reports of less aggressive tax-collecting this way: "There is nothing about the Restructuring and Reform Act or the IRS mission statement called for by this act that implies less effective tax collection." In fact, he says the tax agency intends "to achieve better compliance with the tax law by concentrating enforcement resources more effectively on the small minority of taxpayers who do not comply."


Joan Szabo is a writer in Great Falls, Virginia, who has reported on tax issues for more than 13 years.

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This article was originally published in the November 1999 print edition of Entrepreneur with the headline: Easy Street.

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