IR-2009-2, Jan. 6, 2009
WASHINGTON — The Internal Revenue Service today kicked off the 2009
tax filing season by announcing a number of new steps to help
financially distressed taxpayers maximize their refunds and speed
payments while providing additional help to people struggling to meet
their tax obligations.
IRS Commissioner Doug Shulman encouraged taxpayers to take advantage
of several new tax credits and deductions this filing season and
announced a major enhancement to the Free File program that will allow
nearly all taxpayers to e-file for free and accelerate their refunds.
“With so many people facing financial difficulties, we want
taxpayers to get all the tax credits they’re entitled to as quickly as
they can,” Shulman said. “In addition, we are creating new protections
to help people trying to meet their tax obligations. The IRS will do
everything it can to help during these tough times.”
Help for People Who Owe Taxes
With many people facing additional financial difficulties, the IRS
is taking several additional steps to help people who owe back taxes.
“We need to ensure that we balance our responsibility to enforce the
law with the economic realities facing many American citizens today,”
Shulman said. “We want to go the extra mile to help taxpayers,
especially those who’ve done the right thing in the past and are facing
unusual hardships.”
On a wide range of situations, IRS employees have flexibility to
work with struggling taxpayers to assist them with their situation.
Depending on the circumstances, taxpayers in hardship situations may be
able to adjust payments for back taxes, avoid defaulting on payment
agreements or possibly defer collection action.
The IRS reminds taxpayers who are behind on tax payments and need
assistance to contact the phone numbers listed on their IRS
correspondence. There could be additional help available for these
taxpayers facing unusual hardship situations.
Among the areas where the IRS can provide assistance:
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Postponement of Collection Actions: IRS employees
will have greater authority to suspend collection actions in certain
hardship cases where taxpayers are unable to pay. This includes
instances when the taxpayer has recently lost a job, is relying solely
on Social Security or welfare income or is facing devastating illness
or significant medical bills. If an individual has recently encountered
this type of financial problem, IRS assistors may be able to suspend
collection without documentation to minimize burden on the taxpayer.
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Added Flexibility for Missed Payments: The IRS is
allowing more flexibility for previously compliant individuals in
existing Installment Agreements who have difficulty making payments
because of a job loss or other financial hardship. The IRS may allow a
skipped payment or a reduced monthly payment amount without
automatically suspending the Installment Agreement. Taxpayers in a
difficult financial situation should contact the IRS.
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Additional Review for Offers in Compromise on Home Values:
An Offer in Compromise (OIC), an agreement between a taxpayer and the
IRS that settles the taxpayer’s tax debt for less than the full amount
owed, may be a viable option for taxpayers experiencing economic
difficulties. However, the equity taxpayers have in real property can
be a barrier to an OIC being accepted. With the uncertainty in the
housing market, the IRS recognizes that the real-estate valuations used
to assess ability to pay may not be accurate. So in instances where the
accuracy of local real-estate valuations is in question or other
unusual hardships exist, the IRS is creating a new second review of the
information to determine if accepting an offer is appropriate.
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Prevention of Offer in Compromise Defaults:
Taxpayers who are unable to meet the periodic payment terms of an
accepted OIC will be able to contact the IRS office handling the offer
for available options to help them avoid default.
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Expedited Levy Releases: The IRS will speed the
delivery of levy releases by easing requirements on taxpayers who
request expedited levy releases for hardship reasons. Taxpayers seeking
expedited releases for levies to an employer or bank should contact the
IRS number shown on the notice of levy to discuss available options.
When calling, taxpayers requesting a levy release due to hardship
should be prepared to provide the IRS with the fax number of the bank
or employer processing the levy.
Taxpayers with financial problems who discover they can’t pay when
they file their 2008 tax returns also have options available. IRS.gov
has a list of What If?
scenarios that deal with payment and other financial problems. These
scenarios, in question-and-answer format, provide information on
specific actions taxpayers can take. Taxpayers unable to pay in full
can likewise contact the IRS to discuss additional options to pay.
Maximizing Refunds and Speeding Refund Delivery
This filing season, there are several steps taxpayers can take to
maximize their refunds and speed the delivery of money from the IRS.
Taxpayers should look into the numerous tax breaks available and
take every credit, deduction and exclusion for which they qualify.
People who had less income in 2008 could find they qualify for credits
for which they previously did not qualify. And there are several new
benefits this year:
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First-Time Homebuyer Credit: Those who bought a
principal residence recently or are considering buying one should take
note. This unique credit of up to $7,500 works much like a 15-year
interest-free loan. A special page on IRS.gov has more details and answers to common questions.
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The Recovery Rebate Credit: This credit is
figured like last year's Economic Stimulus Payment except that Recovery
Rebate Credit amounts are based on tax year 2008 instead of 2007. Most
people already received their full benefit in the form of the Economic
Stimulus Payment. However, a taxpayer may qualify for the Recovery
Rebate Credit, if, for example, he or she did not get an Economic
Stimulus Payment, had a child in 2008 or had a change in income level.
If you receive this credit, it will be included in your refund and will
not be issued as a separate payment. See the Form 1040 Instructions,
Fact Sheet 2009-3 or the information center on IRS.gov for details.
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Standard Deduction for Real Estate Taxes:
Taxpayers can claim an additional standard deduction, based on the
state or local real estate taxes paid in 2008. The maximum deduction is
$500, or $1,000 for joint filers.
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Mortgage Workouts and Foreclosures: For most
homeowners, these are now tax-free. Eligible homeowners can exclude
debt forgiven on their principal residence if the balance of the loan
was less than $2 million. The limit is $1 million for a married person
filing a separate return. See Form 982 and its instructions for details.
This Web site, IRS.gov, has more information on these and other
popular credits, such as the child tax credit, the Earned Income Tax
Credit and alternative fuel vehicle credit.
E-File, E-Pay and Direct Deposit
This year, electronic filing options will speed the payment of
refunds to millions of taxpayers. Taxpayers who e-file and choose
direct deposit for their refunds, for example, will get their refunds
in as few as 10 days. That compares to approximately six weeks for
people who file a paper return and get a traditional paper check.
This year, taxpayers can begin filing electronically on Jan. 16.
The IRS in 2009 is again offering free tax preparation and filing
through the Free File program. Anyone with an adjusted gross income up
to $56,000 can use the standard Free File options this year –– that is
approximately 98 million Americans. The program also has usability
improvements, including a standardized set of electronic forms that are
most frequently used by Free File-eligible taxpayers.
This year the IRS and its partners are offering a new option, Free
File Fillable Tax Forms, that opens up Free File to virtually everyone,
even those whose incomes exceed $56,000.
Free File Fillable Tax Forms allows taxpayers to fill out and file
their tax forms electronically, just as they would on paper. This
option does not include an “interview” process like the other Free File
offerings, but it does allow taxpayers to enter their tax data, perform
basic math calculations, sign electronically, print their returns for
recordkeeping and e-file their returns. It may be just right for those
who are comfortable with the tax law or those who use electronic
software to prepare their returns but file using paper forms.
Both the fillable-forms option and the previously available Free
File offerings are available only through the IRS.gov Web site. More
information will be available in mid-January.
1040 Central and Taxpayer-Friendly Features
When they visit the IRS.gov Web site this filing season, taxpayers
may notice the new “rotating spotlight” feature on the homepage. The
spotlights, which change every few seconds, give the taxpaying public
direct access to more of the IRS Web site’s vast amount of content.
Also on the homepage, taxpayers can click on 1040 Central to
find help preparing and filing their tax returns. Like last year, this
popular section of IRS.gov has a wide range of offerings that address
taxpayer needs.
Finally, the IRS is producing a number of podcasts this filing
season that will be available on IRS.gov. In addition to Tax Tips, Fact
Sheets and News Releases, these short audio interviews cover a wide
range of topics and are a way for the IRS to reach out to a new
generation of taxpayers.
Tax Filing Fact Sheets
For more tax season topics, see the following fact sheets:
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