Taxpayers facing potential collection action from the Internal Revenue Service might have good reason for alarm. Garnishments and tax liens are aggressive collection methods that can be hard to remove, once attached. Even in contexts like foreclosure or bankruptcy, tax liens may receive priority or remain with property, despite a transfer in ownership.
When facing a disputed tax liability, many taxpayers might take comfort in a consultation with a tax attorney. Although the IRS has administrative remedies for resolving tax controversies, an attorney might provide extra peace of mind by reviewing proposals such as installment agreements, partial pay installments, or offers in compromise.
For example, tax installment agreements often require some negotiation with IRS officials. Partial pay agreements, which may resolve a tax liability for a reduced amount, typically must be repaid within a period of two years. Yet arriving at the amount of monthly payments often requires negotiation. Such variables might include specified maximum allowances for rent and living expenses, child support or parenting obligations, vacation budgets, and transportation needs.
However, a recent report by the Treasury Inspector General for Tax Administration suggests that the IRS may need to better monitor its partial pay installment agreement program. Such PPIA agreements typically receive an automated review that reevaluates a taxpayer’s ability to pay. If a review is flagged, an IRS official may perform a manual review.
According to the report, an automated review did not occur in as many as 10 percent of the PPIAs. In addition, the report advised expanding PPIAs to taxpayers currently labeled as unable to pay. Needless to say, inefficient tax administration may create an extra burden on other taxpayers.