I heard one of those new public service announcements for the IRS "Fresh Start" program this morning.  These things crack me up.  The IRS is hitting the airwaves hard with this message.  Here's one of the scripts:

MR MORRIS: Hey Joe, you’re here pretty early.
JOE:  Yes sir, trying to make a little extra. I really need the money.
MR MORRIS: So, you got that bigger apartment you were talking about?
JOE:        Ah, no. I had to put that off.  
MR MORRIS:      Must be your school loans are coming due.
JOE:   No, I’m OK on those. It’s, uh …
MR MORRIS: Joe, what’s up? You look worried.
JOE:  It’s my taxes.  I still owe money for last year.  And, now it looks like I’m going to owe more for this year. I just don’t have the money.
MR MORRIS:      You know, I think I can help.
JOE:  Mr. Morris, I don’t want …..
MR MORRIS:    Just some advice, Joe. Go to irs.gov, and read up on the new Fresh Start effort and other programs.  You can pay some now, and work out a plan to pay the rest in installments over time.
JOE:  Huh. Fresh Start. Payments over time. 
MR MORRIS: Oh, which reminds me, Joe.  Overtime. You know, I think we can get you more hours.
JOE:  Thanks.
ANNCR:    irs.gov.  From payment options to time-saving tools, it’s the best tax tip of all.
What "Mr. Morris" (we'll call him Oscar, he's an actor, let's face it) fails to mention to Joe (the mechanic?) is that back-breaking penalties and interest are going to make it very difficult for Joe to ever get out of his mess, even with working two jobs.  That is, if he qualifies for an installment agreement at all.   

Now, I'm not suggesting that installment agreements are bad per se. I'm just wondering where is the "freshness" to this "fresh start" program?  Installment agreements have been around the IRS forever, they aren't new.  They have always accrued penalties and interest, and will continue to do so during our lifetimes.  For that reason, they are not the one-size-fits-all cure for tax problems that the IRS would have you believe. 

What is especially misleading about this ad is that Joe and others like him may not even get an automatic payment plan from the IRS.  For instance, 1) Joe may owe more than $10,000 to the IRS.  2) He may have equity that the IRS would like to liquidate in his home or his cars. 3)  He may have previously had a payment plan in the past.  4) He may have failed to pay on time in the last 5 years.  5) He may not be able to pay the amount owed in 3 years.  6) He may be unwilling to open up his life to the IRS and submit financial statements that show he cannot pay in full on the spot.  If even one of these conditions is present, Joe has got to jump through more hoops to get an installment agreement with the IRS. 

Most disturbing about this PSA is that there are other great IRS programs that can give a true fresh start for taxpayers.  For instance, the offer in compromise, currently not collectible status, and bankruptcy (in certain circumstances) can cut taxes to zero.  Penalties can be abated for reasonable cause.  Installment agreements are usually the collection alternative of last resort. 

I had hoped government agencies learned their lesson when the U.S. Census Bureau paid millions to have a clever ad running during the most expensive time slot in American advertising (the 2011 Super Bowl).  Now, the IRS is faced with the daunting task of closing the tax gap AND paying for expensive advertising!  

Don't settle for the IRS' preferred collection alternative before you know the full gamut of rights you may have.  Most taxpayers have more than one route to a true fresh start.  Learn more about those options from a local licensed tax lawyer like Travis Watkins today at 607-1192 or 1-800-721-7054.

Travis Watkins
Senior Tax Attorney
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