IRS to cut struggling taxpayers some slack

Article by: KARA McGUIRE , Star Tribune
Updated: January 6, 2009 - 10:07 PM

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Times are tough and the tax man understands. The Internal Revenue Service announced Tuesday that it will work with taxpayers struggling to pay their bill this tax season. Among several initiatives, IRS employees will have authority to postpone collections activities for some financially distressed taxpayers, including individuals who recently lost a job or are facing significant medical bills. The IRS also pledged to be more flexible about missed installment payments.

In a Tuesday conference call, IRS Commissioner Doug Shulman urged Americans facing financial hardship to pick up the phone as soon as they realize they can't afford their tax bill. But, he warned, for those who can afford to pay, "this isn't a free ride."

Taxpayers with lower income in 2008 than in recent years might also want to check to see if they qualify for certain income-based credits such as the earned income tax credit.

Also new for 2009: More IRS podcasts, a feature at IRS.gov called "What if?" explaining what taxpayers can do if they're facing certain economic situations. Also new are "fillable'' online forms that let taxpayers of all income levels fill out and file their returns electronically for free. Unlike tax-filing software such as TurboTax, the IRS forms don't use an interview process to plug in numbers, although they'll perform basic math calculations.

Hoping for a refund to pad your pocketbook? Taxpayers who use e-file with direct deposit typically receive their refunds in 10 days compared with six weeks for those filing the old-fashioned way.

Kara McGuire • 612-673-7293