The Internal Revenue Service says it’s pulling out all the stops to come to agreement with taxpayers who owe back taxes. Through its Office of Chief Counsel, the agency announced the significant expansion of its Settlement Days program and proclaimed March 2021 is now “National Settlement Month.”
All hands on deck
These annual Settlement Days are coordinated efforts that aim to resolve cases in U.S. Tax Court. The IRS seeks to give taxpayers who don’t have counsel of their own the chance to get “free tax advice from Low Income Taxpayer Clinics (LITCs), American Bar Association (ABA) volunteer attorneys, and other pro bono organizations.”
To help meet this goal, the IRS has been working with Chief Counsels in every state and the District of Columbia to make sure unrepresented taxpayers across the country have a chance to participate in Settlement Days. Because of the pandemic, the program will once again feature “Virtual Settlement Days” rather than face-to-face meetings.
The IRS notes that taxpayers “can also discuss their Tax Court cases and related tax issues with members of the Office of Chief Counsel, the IRS Independent Office of Appeals, and IRS Collection representatives.” These wider communication channels can help both sides to reach a settlement by giving taxpayers a better idea of what’s needed to support their case.
If a settlement is reached, IRS Collection representatives can discuss potential payment alternatives.
The Virtual Settlement Days structure can also help those taxpayers who decide to go to court, providing them with a better idea of what information they need to be successful.
Settlement Days will address other issues, too
The Taxpayer Advocate Service is also pitching in to expand the types of services offered on Settlement Days.
“Local Taxpayer Advocates and their staff can work with and inform taxpayers about how TAS may be able to assist with other unresolved tax matters, or to provide further assistance after the Tax Court matter is concluded,” the IRS explains. “If a taxpayer experiences difficulties concerning collection, TAS can also assist with collection alternatives.”
How do taxpayers participate in Settlement Days?
There are a few different ways that taxpayers can participate in a VSD event.
“One way is to be notified and invited to attend by the IRS as part of its work with LITCs and pro bono attorneys,” the IRS says. “The IRS proactively identifies and reaches out to taxpayers with Tax Court cases which appear most suitable for this settlement day approach. The IRS also generally encourages taxpayers with active Tax Court cases to contact the assigned Chief Counsel attorney or paralegal about participating in the March VSD events.”
Commissioner Rettig says a taxpayer has nothing to lose by taking part in the Virtual Settlement Day process.
"I strongly encourage all taxpayers who have the ability to participate in a settlement day event to do so because they will understand their own case better while not giving up their day in court if they so choose," Rettig said.
This year's program will be offered at several new locations, like the following:
- Des Moines
- Little Rock
- San Diego
- San Jose
Last year’s foray into virtual meetings not only provided the blueprint for this year’s Settlement Days event, but it has been used to help provide resolution services to taxpayers all year long.
“Chief Counsel and LITCs have successfully used VSD events to help more than 259 taxpayers resolve Tax Court cases without having to go to trial,” the IRS says. “This saves taxpayers and the government time and money.”
The IRS stresses, however, that this help isn’t exclusive to Settlement Days: Chief Counsel attorneys and paralegals who are assigned to cases are always available to settle cases outside of the VSD program.