There currently exists within the federal tax administration system a form of "Catch 22".
The Internal Revenue Service cannot collect outstanding liabilities because taxpayers can't afford to pay them - and
taxpayers can't afford to pay them because the amount is too high due to accrued penalty and interest.
An initial outstanding tax liability of $5,000 could easily mushroom to $15,000 or more over the years with constant
accrual of penalties and interest.
The end result in many cases is that the IRS writes off the entire amount due.
Obviously the IRS could never permanently remove penalties and interest. If they did taxpayers would have no
motivation to file and pay their taxes on time.
The answer lies in a temporary Federal Tax Amnesty. Such a program would -
generate millions, if not billions, of dollars,
allow a great many taxpayers to get rid of the IRS cloud from over their heads,
permit the IRS to "close the books" on a substantial number of overdue accounts, and
encourage the filing of delinquent returns.
It is definitely a win-win situation.