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Tuesday, April 17, 2012

McDermott Tax Bill: Provides Needed Relief to Businesses

For Immediate Release: April 17, 2012
Contact: Kinsey Kiriakos, 202-821-5002

McDermott Tax Bill: Provides Needed Relief to Businesses

WASHINGTON, DC – Today, to mark Tax Day and put forward common sense changes to support businesses and preserve jobs, Congressman Jim McDermott (D-WA) introduced the “Tax Levy Relief Act of 2012.” It would allow the Internal Revenue Service to make sure that in pursuing businesses that owe back taxes, they do not unnecessarily cost jobs in the process. The Tax Levy Relief Act would give the IRS the authority to release a tax levy if that levy would cause an undue economic hardship to that struggling business.  In the wake of the recent recession thousands of businesses struggled to meet their tax liabilities, resulting in the imposition of levies on many of these businesses.  Levies are a legal seizure of property that the IRS uses to satisfy tax debts.  Oftentimes, the imposition of these levies can cause serious harm to a business through loss of customers, reputation and access to financing.

“There are thousands of viable businesses that have struggled greatly to stay current on their taxes as a result of the devastating recession.  They should pay off their tax debt, but forcing them to do so by seizing their assets shouldn’t be the only option,” said Congressman McDermott, who is a senior member of the Ways and Means Committee – the U.S. House of Representatives’ tax-writing panel.  “The IRS should have the discretion to look at the facts and circumstances of a business and decide the best way to collect an outstanding debt without causing irreparable harm to the business, its employees and the communities they serve.”

Longstanding IRS regulations allow the IRS to relieve individuals, but not businesses, from levies on the grounds of economic hardship. The Taxpayer Advocate Service – an independent organization within the IRS tasked with helping taxpayers – recommended that Congress amend the Internal Revenue Code to permit the IRS to lift levies on the basis of economic hardship.  As stated in the TAS’ 2011 Report to Congress, “IRS collection procedures do not consider how long the entity has been in business, the business’s long-term compliance history, or the nature of the delinquency problem... [They] focus on the business’s ability to liquidate its productive assets to pay existing tax debt.”

McDermott added, “Since 2008, the IRS has increased its use of levies against businesses by 20%. Levies can be devastating to the survival of a small business and as the economy begins to recover, it’s especially critical that we provide businesses with every opportunity to succeed.  This legislation would allow the IRS to use common sense to save businesses and jobs.”

Specifically, the Tax Levy Relief Act of 2012 (H.R. 4368) would:
  • Permit the IRS, in its discretion, to release a levy against the taxpayer’s property or rights to property if the IRS determines that satisfying the levy will create an economic hardship due to the financial condition of the taxpayer’s business; and,
  • Require the IRS, in making the determination, to release a levy on economic hardship grounds to consider the economic viability of the business, the nature and extent of the hardship, and the potential harm to individuals if the business is liquidated.

McDermott introduced the bill with the support of Congressmen John Lewis (D-GA), Pete Stark (D-CA), Charles Rangel (D-NY), Richard Neal (D-MA), Ron Kind (D-WI), John Larson (D-CT), Earl Blumenauer (D-OR) and Bill Pascrell (D-NJ).  The bill is also endorsed by the National Association of Enrolled Agents and the National Small Business Association.


Follow McDermott on Twitter: @RepJimMcDermott.

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