* Changes offer more flexibility
* Middle-class taxpayers will benefit-tax professor
WASHINGTON, May 21 (Reuters) – More middle-class Americans
will be able to work out their debts to the U.S. Internal
Revenue Service because of changes in a tax payment forgiveness
program, the agency announced on Monday.
The “Offer in Compromise” program lets taxpayers negotiate
agreements with the IRS to pay less than the full tax owed. The
announced changes ma ke the program more flexible for taxpayers,
w ith some people able to pay off their debts faster, according
to the IRS.
The IRS announcement focused on the financial analysis used
to determine which taxpayers qualify for an Offer in Compromise.
Additionally, the program gives taxpayers flexibility to
payoff student loans and local taxes while making the federal
tax payments.
“This is going to be a big deal for middle-class people,”
said Keith Fogg, a tax professor at the Villanova University
School of Law who formerly was an IRS district counsel.
Participation in the program has jumped since 2009 because
of the weak economy. The IRS accepted 34 percent of workout
offers it received in fiscal 2011, up from 25 percent in fiscal
2010. To stay in the program, an individual must agree to file
and pay taxes for the next five years.
Negotiations in the program can take months. A Treasury
Inspector General for Tax Administration report in March said
the program suffers from backlogs and delays.
(Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh
and Carol Bishopric)
