PRACTICE CORNER FROM THE
Is the IRS Really Offering Struggling Taxpayers Relief?
In an effort to help struggling taxpayers due to COVID-19 issues, the IRS announced a plan back on Nov. 2, 2020, to make it easier for people to settle their tax debt by setting up payment agreement options. But, have they really made it easier? Here is what they said: “To reduce burden, certain qualified individuals, who owe less than $250,000, may set up Installment Agreements without providing a financial statement (433A) if their monthly payment proposal is sufficient.” Some Roz Strategies’ members reached out to me and shared they were concerned, thinking this was going to be bad for their business. A few went so far as to say they thought they should lower their fees on installment agreements for people who owed less than $250,000. At first read, you might also think that this will hurt your business or think, “Taxpayers won’t need us to help negotiate with the IRS.” But before you do anything drastic, like reducing your fees, let’s take a closer look at the IRS’s statement. First off, what is a “certain qualified individual”? And, secondly, what do they mean “if their monthly payment proposal is sufficient”? We already have Streamline Installment Agreements (SIA) for amounts under $50,000, assuming the client can fully pay their tax liability in 72 months. The IRS phrase
“if their monthly payment proposal is sufficient” means that they must be able to full pay their tax liability in 72 months. How many prospects do you meet with that can fully pay $100,000, $150,000, $200,000, or $250,000 within 72 months? Not many, if any at all. Your client would have to shell out $1,389 (at $100,000 owed) a month to $3,472 a month (at $250,000 owed) to take advantage of this new initiative. My point is this: Do not be fooled thinking the IRS is trying to help taxpayers who owe money. They know that very few Americans will even come close to qualifying for this “relief.” In my opinion, it is window
dressing and good PR for the IRS, and it shouldn’t affect your fees or getting retained. Once I shared this info to the people who reached out to me with their concerns, they realized that very few of their prospective clients actually qualify for this relief, and then they felt relived. Let us not forget, the IRS is the most brutal collection agency on the planet. They are in the collection business, not the charity business. And collect they will, especially when they think you have their money. –Michael Rozbruch
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