Indianapolis businesses and individuals have experienced a huge increase in Internal Revenue Services collections actions. Many factors play into the major shift in this activity but, the main drivers are out of control budget deficits and improved data analysis on the part of the IRS.
Over the last 7 years, the IRS has demonstrated a heightened focus on enforcement of action toward delinquent taxes for both individuals and Indianapolis businesses failing to pay payroll taxes. Two key factors play a role in the increased IRS actions.
(1) The Economy – The economic downturn presented greater compliance risk with taxpayer contributions—contributions needed for challenges to the nation’s economy. A stabilized tax base is desired through an economic climate facing the country.
(2) Technology – While the economic crisis endured by the nation mostly definitely impacted the IRS focus on collections, technology advances improved the agency’s ability to enforce action. Technology has allowed the IRS to more efficiently identify delinquencies through:
- Automated Under-Reporting System (AUR) – the IRS system that automatically sends a notice when items reported on Form 1040, U.S. Individual Income Tax Return, don’t match information reported to the IRS by employers and other payers.
- Tax Payer Identification Number (TIN) Matching – an Internet based pre-filing e-services allowing “authorized payers” a chance to match 1099 payee information against IRS records prior to filing information returns.
The initial aggressive collections practices of the IRS were met with much criticism from the National Taxpayer Advocate, the leader of an individual organization within the IRS dedicated to helping taxpayers resolve and prevent problems with the IRS. From in-depth studies and reports delivered by Taxpayer Advocate Services (TAS), the IRS introduced its “Fresh Start” program to improve its approach to collections on tax delinquencies, recognizing that a greater need to fully consider the facts and circumstances of an individual’s delinquency, such as undue hardship.
With the “Fresh Start,” more options are available to taxpayers with unpaid or unfiled taxes—options like installment payments. KLP CPAs, Indianapolis accountants, can help you navigate your options. We offer a judgment-free and personalized consultation to help you move past Indianapolis IRS collections issues. Give us a call today.
