Wednesday, February 11, 2009

IRS Amnesty Would Stimulate Economy, Give Struggling Taxpayers a Fresh Start

One writer from the Cincinnati News recently posted an article urging Congress to offer amnesty to taxpayers that have not filed because of unpaid taxes. The author suggests that by doing so, the IRS would stimulate the economy. A portion of the article can be found below, but the full text can be read here:

Congress is looking for ways to raise money as well as stimulate the economy. Many hard-working Americans, despite good intentions, have fallen behind on their taxes - it could be divorce, medical problems, or the challenges of a business during hard times. These life situations often lead to an unfortunate dropping out of the tax system. If the taxes cannot be paid, the returns are often not filed.

I urge Congress and the Secretary of the Treasury to offer amnesty to the 6.1 million IRS non-filers if they come forward and pay the taxes they owe.

The non-filing is usually accompanied by a feeling of helplessness. Once behind, interest and penalties escalate to the point that a taxpayer can never catch up.

The failure to act is magnified by the fact that interest and penalties double the original tax liability every five years. Someone paying $100 monthly on a $20,000 IRS debt will find that the amount owed actually increases, not decreases, because of the interest and penalties.

For honest taxpayers that come forward with their taxes, provide relief from the interest and penalties if the tax is paid when the returns are filed. To ensure future compliance, implement a five-year probationary period to stay current on all future obligations. Those suspected of tax crimes would not be eligible.

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