September 14,2007

Grassley, Colleagues Urge IRS to Help Tax Burden of Home Loan Debt Forgiveness on Working Families

WASHINGTON – Sen. Chuck Grassley, ranking member of the Committee on Finance, along with two fellow Finance Committee members, is urging the Treasury Department and Internal Revenue Service (IRS) to take action to ensure that working families who lose their homes to foreclosure face more reasonable, accurate tax bills for their home loan debt forgiveness.

“Working families who lose their homes are getting hit with huge tax bills,” Grassley said. “Some of those bills are unfairly high and even inaccurate. The IRS needs to take steps to ensure the accuracy of the bill in the first place. Then the IRS should offer the taxpayer every opportunity to negotiate the of the bill and a fair payment plan. The agency has plenty of authority to treat taxpayers reasonably in these situations. It needs to use that authority to serve taxpayers.”

Grassley and fellow Finance Committee members Sens. Gordon Smith of Oregon and Pat Roberts of Kansas wrote to the Treasury secretary to urge these changes. The text of their letter follows here. Also pasted below is the text of a New York Times story describing the post- foreclosure tax problem.