To the shock of many, Donald Trump won the presidency this week. Now, many are speculating in earnest what a Trump presidency will look like. Some have hope that he will be a strong leader that will truly “Make America Great Again” like he promised. However, many are in fear of how his presidency, and his promises, will affect their lives. Some of this fear is centered on his stance on social justice and humanitarian issues, and for many, it is also whether or not their job or financial situation will be negatively affected.
One financial area that is too often forgotten about by all candidates is what happens when you have federal tax debt and face potential action from the IRS. Even this year when student loan debt became a hot-button issue on the campaign trail, the candidates remained silent on how to help those suffering under the weight of a federal tax debt. So the question remains: how will Trump’s presidency affect those who owe money to the IRS?
Donald Trump’s Relationship with the IRS
One major area of contention during the election was that Trump himself never revealed his tax returns to the public, with the excuse that it was because he was under a routine audit. In one of the debates, he was proud to have not paid taxes and said, “That makes me smart” after responding to Secretary Clinton’s accusation of not paying federal tax. A New York Times report suggested that Trump might have avoided paying taxes for 18 years, based on reviews of the 1995 tax records. He also reportedly might owe as much as $700,000 to the IRS, according to estimates from Fortune.
Despite reports, Trump has stated that he does pay federal taxes. Whatever his tax returns really say, he most likely does use as many tax loopholes as possible to pay as little tax as possible, just like many people do. Since he has potentially personally experienced issues with the IRS, could this mean he might be a defender of those who find themselves in hot water with the IRS?
Trump Presidency: First Hundred Days
Trump has released his plans for his first hundred days in office. This dictates the areas about which he is most concerned. These areas include the following:
• Clean up Washington
• Protect workers
• Restore rule of law
As part of this plan, he hopes to impose term limits on Congress. He also wants to quickly introduce 10 pieces of legislature that closely coincides with his talking points and promises on the campaign trail. Some of these include repealing Obamacare (the Affordable Care Act), finding ways to build the wall on the border of Mexico, rebuilding military bases, investing in infrastructure, and promoting school choice. A key part of this work also includes his tax plan: the Middle Class Tax Relief and Simplification Act.
The New Tax Plan
The Middle Class Tax Relief and Simplification Act is a plan to reduce and simplify tax by providing a significant tax reduction to the middle class. The idea is to provide a 35 percent tax cut to middle class families with two children, and similar cuts for other filers in the middle class. It will also change the tax rate for businesses to try to bring business back to America.
Trump’s tax plan was a major point of his campaign focus. He hopes to reduce taxes, especially for working and middle-income Americans. If passed, this might reduce the tax burden and lower the number of people who find it difficult to pay their taxes and end up owing money.
The IRS currently has plans in place known as the Fresh Start Initiative to help those who owe money. Trump has yet to comment on whether or not he will make any changes to these tax relief programs, whether to increase them and help those who owe money or do away with them.
What Does This Mean?
Trump has expressed pride in able to pay as little as possible to the IRS. Could he bring this to the regular person? Or will he enact tax laws that end up hurting, rather than helping, those that struggle to pay their taxes or already owe money? Time will be the deciding factor. In the meantime, take action now if you owe money to secure your future free of the IRS. Any reforms that Trump might enact could take years to get through Congress and become active components of the tax law.
The tax professionals at Fidelity Tax Relief will help you to determine the best course of action, whether an Offer in Compromise, Installation Agreement, Penalty Relief, or something else. Call us today at 877-372-2520 for a free consultation to get started.