Bill Seeks to Stop IRS Tax Levies on Very Poor Americans

On behalf of Brian Coggins of Coggins Law, P.C. posted in Back Taxes or Tax Debt on Wednesday, May 20, 2015.

Last week, we wrote about the kinds of tax filers most likely to face an audit. The list includes people with annual incomes of more than $10,000. The Internal Revenue Service naturally focuses its limited audit resources on the "cash cows," but it is far less discerning when it comes to collection actions that include wage garnishment and levies.

In 2011, a U.S. Tax Court ruling held that the IRS should not and cannot issue levies on taxpayers who are facing economic hardship. The agency roughly defines economic hardship as making $29,000 per year or less. The independent Office of the Taxpayer Advocate later provided further guidance on the Tax Court's ruling. In spite of this, however, the IRS continues to go after very-low-income taxpayers with levies and similar means to collect debt.

To be clear, being impoverished does not mean that a person's tax liability is forgiven. Rather, it means that the IRS is required to work with the person to set up manageable options like a repayment plan.

But as we mentioned above, the IRS is not abiding by these requirements. For this reason, federal legislators are currently considering a bill called the "Taxpayer Economic Hardship Protection Act of 2015," which would put the force of law behind relief measures the IRS is already supposed to abide by.

The legislator who introduced the bill notes that individuals and families living in poverty are barely getting by even without additional tax collection burdens. Therefore, "recklessly recouping the funds from already economically vulnerable Americans will be the final financial blow for these families. This bill ensures that the IRS uses the tools already at its disposal to responsibly manage tax collections."

Source: Accounting Today, "Congresswoman Introduces Bill to Limit IRS Wage Garnishments and Property Seizures," Michael Cohn, April 23, 2015