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IRS lends hand to delinquent taxpayers

WASHINGTON - The Internal Revenue Service says it's trying to help people who are struggling to pay delinquent tax bills, so it's reducing the number of property liens and easing rules for small businesses to enter into installment agreements.

As the economy has soured, the agency has filed an increasing number of liens on property owned by delinquent taxpayers. The IRS filed nearly 1.1 million liens in the budget year that ended in September, compared with 426,000 in 2001.

The steps announced Thursday will double the amount of back taxes a person can owe before facing a possible lien. Previously, taxpayers who owed at least $5,000 and ignored numerous IRS notices would get an automatic lien placed on their property.

Under the new policy, effective for 2010 filings, the threshold is $10,000. The change will make it easier for people to have liens withdrawn once tax bills are paid or they start paying under certain installment plans. More taxpayers can settle their tax debt for less than they owe, if they meet certain income and debt requirements.

Small businesses with larger delinquent tax bills will be eligible for 24-month payment plans. Previously, the tax bill had to be less than $10,000; now it's up to $25,000.

The changes, however, don't go far enough, said Nina E. Olson, the national taxpayer advocate, an independent watchdog within the IRS. The agency will still file liens automatically, without analyzing whether a lien is likely to generate any tax revenue, she said. - AP

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