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IRS to change collection system for liens and offers

The IRS has announced that it will help California taxpayers who are struggling financially with a series of new initiatives that may help Orange County residents get control of their tax liabilities.

Falling behind on taxes is usually not an intentional occurrence and the threat of tax liens, spiraling penalties and interest is too much for many taxpayers to bear without an experienced Orange County tax attorney on their side. The IRS says that it will make the tax collections process less onerous by modifying its tax lien system to help California taxpayers avoid tax liens and pay back taxes.

"We are making fundamental changes to our lien system and other collection tools that will help taxpayers and give them a fresh start," IRS Commissioner Doug Shulman said. "These steps are good for people facing tough times, and they reflect a responsible approach for the tax system."

A tax lien or levy is often placed on a California taxpayer's bank account or wages. This happens when the taxpayer owes an outstanding amount to the IRS, usually from improper exemptions claimed on a W-4. Changes to the lien system include increasing the amount a taxpayer must owe before a lien is issued, and a streamlined process for lien withdrawals after a tax bill is paid. The IRS will also begin withdrawing liens when taxpayers enter in a installment agreement, which will now be easier for struggling small businesses to access.

The IRS also said that it will streamline the Offer in Compromise process, making it more inclusive and easier to navigate.

"These steps are in the best interest of both taxpayers and the tax system," Shulman said. "People will have a better chance to stay current on their taxes and keep their financial house in order. We all benefit if that happens."

Source: IRS, "IRS Announces New Effort to Help Struggling Taxpayers Get a Fresh Start; Major Changes Made to Lien Process," June 3, 2011

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