Afraid to file a tax return because you can't afford to pay all you owe? Don't be.
Federal tax officials say they're going to be unusually accommodating this year to help taxpayers who are strapped because of the souring economy.
"We want to go the extra mile to help taxpayers, especially those who've done the right thing in the past and are facing unusual hardships," said Internal Revenue Service Commissioner Doug Shulman at a recent news conference.
Although there is no set policy on how to handle taxpayers who are unable to pay this year's bill, Shulman said he has instructed his staff to be sensitive and flexible. Taxpayers do need to file a return, he emphasized. But if they can't pay, they should call the IRS to work something out.
The agency also launched a five-point plan to help those who are behind in past tax debts, giving IRS agents the ability to suspend collection actions, adjust payments for back tax bills and provide lenient treatment to those who need to miss a payment on an existing installment agreement.
Shulman said the agency also would be quicker to release liens and levies in hardship cases and would review rejected requests from taxpayers who asked to be allowed to pay only a portion of their tax, to make sure they were not unfairly rejected because of home equity that's since evaporated.
Then, too, officials said that some people may be in better shape -- at least from a tax standpoint -- than they think. A passel of new tax deductions and credits went into effect for the 2008 tax year, which may allow millions of additional people to collect refunds.
Some of the more significant changes:
RECOVERY REBATE CREDIT. If you did not receive an economic stimulus payment last year -- or didn't get the full amount -- you may be able to claim it on this year's return. Millions of people automatically received stimulus payments last year. But some people who qualify did not receive them or got less than they were owed because the automatic payments were based on 2007 tax return information, even though the credit is based on 2008 income.
If your income was significantly different in 2008 and you think you were unfairly disqualified, you should apply for the rebate credit. (People who didn't get stimulus payments earned either too much or too little in 2007. You need at least $3,000 in qualifying income -- usually wages -- but will be phased out from receiving full payments if you earned more than $75,000 single or $150,000 married.)
If you prefer, the IRS will figure out the credit for you, or if you can wait to file until February, the agency promises to offer an online calculator at www.irs.gov to determine the amount.