The current economic situation has caused many people to be thrifty, especially towards payment of their bills. One such bill, causing havoc in many homes, is IRS dues. The agency has discovered the secrecy of private businesses; that is, when people get the chance to pay their debts or bills over a span of time, one not only receives the monies due, but also interest accrued on the bill.
A number of taxpayers have realized that they are still indebted to the IRS even after fulfilling tax payment obligations through the IRS payment plan. This is a finding that features in the TIGTA reports. The Treasury Inspector General for Tax Administration (TIGTA), is a federal agency that oversees the IRS.
A recent report released by the TIGTA indicates that about 3.1 million individuals signed up for streamlined installment forms with the IRS in the last fiscal year. In these agreements, a taxpayer, with a debt of $25,000 or less is allowed to clear the debt within a five year period. Such agreements involve less documentation by the taxpayer and require minimum processing by the IRS. One can say that such an arrangement constitutes a win-win situation to both parties involved.
Last year, the program definitely was an advantageous trick to a great number of taxpayers, as their debts were paid off. An estimated $6 billion in taxes was generated by the payment program. Unfortunately, as is reported by the TIGTA, a number of taxpayers have realized that their debts in tax won’t be cleared off as they may have expected. This is because the Internal Revenue Service doesn’t consider interest charges at the time of calculating streamlined installment payoffs. Also, current and possible future penalties are not considered. As a result of this, many people are always in debt, even after the expiration of the five year period.
The TIGTA also found out that the taxpayers are not given clear instructions on how to avoid installment plan user fees. The TIGTA report indicates that over $1 million was paid by taxpayers as user fees, expenses that could’ve been avoided. Many taxpayers were shocked to learn that they were still in tax debt, even after completing taking up tax subsidy plans.
Any rule that is applicable to a credit deal is also applicable to any payment agreement with the IRS and must be observed by anyone that wants to sign up for a payment agreement with the revenue body.
In a recent report, the TIGTA Inspector General, J. Russell George, said that inconsistent treatment and processing of taxpayers’ forms greatly contributed to inefficiency and jeopardized the IRS’s tax collection ability. He also mentioned that inconsistencies can result in severe economic hardships to taxpayers and lead to tax liabilities in the future. IRS officials were in agreement with the recommendations made by the TIGTA and are committed toward addressing relevant areas of concern.
Investigations done by the TIGTA would make anyone that may be interested in signing up an installment plan as a means of tax payment rethink his/her plan.