- 38 -
As this chart illustrates, the number of offers the IRS receives has declined sharply –
s,
60
5
’s
mines its revenue collection goals, and it is filing NFTLs against many of these
xpayers, which will undermine their long-term financial viability and ability to pay tax. I
ax
e
ther
cting
many of these taxpayers, surely it would be better to bring more of them back
to compliance by accepting what they can afford and obtaining their pledge to remain in
RS
ability to pay may not be
accurate.” To address these cases, the IRS announced it was “creating a new second
econd review” has not resulted in acceptance of
from 125,390 in FY 2001 to 52,102 in FY 2009, a drop of 58 percent. The number of
accepted offers has declined by even more – from 38,643 in FY 2001 to 10,665 in
FY 2009, a decrease of 72 percent. In FY 2001, the IRS accepted 34 percent of offer
while in FY 2009, it accepted only 25 percent of offers.
109
Another way to look at this situation: At the beginning of FY 2009, there were 4,001,2
taxpayers with delinquent accounts.
110
During FY 2009, the IRS accepted only 10,66
offers. That means, roughly speaking, that the IRS accepted one offer for every 375
taxpayers with a delinquent account. It is also worth noting that the IRS placed the
accounts of 1,030,748 taxpayers into CNC status last year.
111
Thus, the result of the IRS
restrictive offer policy is that the IRS did not collect any tax on many accounts, which
under
ta
note that, remarkably, the IRS often files NFTLs against taxpayers while reviewing their
offers, which does not exactly provide an incentive for taxpayers to try to settle their t
debts and is not an appropriate way to work with taxpayers who are trying to work with th
IRS.
While some taxpayers are unresponsive to the IRS out of fear, preoccupation with o
problems, or in some circumstances a willful desire to flout the law, most delinquent
taxpayers are delinquent because they are struggling financially. If the IRS is colle
nothing from
in
compliance in the future. It is a major failure of IRS collection policy that its offer in
compromise program works with taxpayers in such a small percentage of cases. The I
should do far more to ensure that the offer program is open for business to these
taxpayers.
In January 2009, the IRS announced several steps to assist financially struggling
taxpayers.
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In connection with offers, it noted that “the equity taxpayers have in real
property can be a barrier to an OIC being accepted,” because with the sharp drop in
housing prices, “the real-estate valuations used to assess
review of the information.” To date, this “s
109
The percentage of accepted offers is computed by dividing the number of offers accepted by the
Collection Activity Report NO-5000-2, Taxpayer Delinquent Account Cumulative Report (Mar.
ecap of Currently Not Collectible Report (Oct. 1, 2009)
with Steps to Help Financially Distressed
number of offer dispositions.
110
IRS,
2009).
111
IRS, Collection Activity Report NO-5000-149, R
(covering the period 10-01-2008 to 09-30-2009).
112
IRS News Release, IR-2009-2, IRS Begins Tax Season 2009
Taxpayers; Promotes Credits, e-File Options (Jan. 6, 2009).