IRS Goes Easy on Debtors


The IRS has announced several new rules designed to make life easier for tax debtors. IRS Commissioner Doug Shulman said the new rules are in view of the worst recession in a generation. The IRS is also making efforts to put itself in the shoes of the taxpayers. While the rules have received approvals from some tax experts but the National Taxpayer Advocate, Nina Olson gave a more reserved response, saying the changes were “a step in the right direction” but “are not suffcient to address the problems we have seen.”

The rule that affects the most taxpayers is the one pertaining to liens. Previously, upon settling all tax debts, the IRS would issue a ‘lien release’. This meant that the lien is left on the taxpayer’s credit record for seven years after settlement. But under the new rule, the IRS would issue a ‘lien withdrawal’ upon full payment of all outstanding taxes, interests and penalties. A lien withdrawal will cancel the lien from the taxpayer’s credit record immediately. This would be very essential for obtaining credit as a lien would reduce your credit score by 100 points at FICO, a credit scoring agency.

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