Shocking as it may sound, the IRS anticipates an unsettling $688 billion tax gap for the year 2021. Despite maintaining a tax compliance rate of a steady 85%, much like previous years, the IRS is now faced with a looming problem with America’s tax gap. How does it plan to address this financial chasm? That’s where the IRS Fresh Start program comes in, and here’s how it affects you.
The Impending Tax Gap & Its Implications
America’s tax gap, which is essentially the difference between the total taxes owed and the amount actually collected, is expected to skyrocket to a staggering $688 billion this year. This discrepancy is largely attributable to taxpayers who are struggling financially and, consequently, unable to clear their tax debts. The effects of this tax gap are multifaceted, impacting not just individual taxpayers and small businesses, but also the broader financial landscape.
The IRS Fresh Start Program: A Lifesaver in Disguise?
In response to this escalating problem, the IRS has launched the Fresh Start program. This initiative offers a lifeline to taxpayers by providing a more manageable pathway to clear tax debts. But how does this program impact you?
Easier Debt Resolution: The IRS Fresh Start program significantly reduces financial stress by facilitating a more manageable way for taxpayers to resolve their tax debts. Instead of paying a lump sum amount, taxpayers can now clear their dues in installments.
Improved Credit Scores: Tax liens can drastically damage your credit score. However, by enabling taxpayers to pay off their back taxes in installments, the program helps in avoiding such severe repercussions.
Financial Planning: The program also provides taxpayers with a more extended period to clear their debts. This provision allows for better financial planning and enables individuals to focus on other crucial expenditures without the fear of immediate reprisal from the IRS.
How Does This Impact You?
As an individual taxpayer or a business owner, it is vital to understand the implications of these tax reforms. They not only affect your financial planning but also have a significant impact on your credit score and overall financial health. So, how can you navigate this complex landscape and ensure you’re making the most of these reforms?
The Future of Taxation & You
Addressing the tax gap is a complex issue that requires expertise and understanding. If you’re struggling with your IRS tax issues or need help understanding these reforms, it’s advisable to seek guidance from a tax specialist. Click here or call (800) 875-5509 to connect with a tax expert who can help you with your IRS tax issues.
In conclusion, the anticipated $688 billion tax gap poses a significant challenge for the IRS. However, the Fresh Start Program offers a glimmer of hope, providing a feasible solution for taxpayers struggling with back taxes. As we move forward, it is essential to remain vigilant and informed about these changes and their implications.