IRS unveils new People First Initiative in response to COVID-19. Relief includes suspension of existing Installment Agreement payments and involuntary collection action for certain taxpayers, in addition to providing other taxpayer-friendly provisions.
Overview:
To help people facing the challenges presented by COVID-19, the Internal Revenue Service (IRS) announced a series of steps to assist taxpayers by providing relief on a variety of matters ranging from easing payment guidelines to postponing compliance actions (link below).
Key Takeaways:
- IRS will not default any existing Installment Agreements during the April 1–July 15, 2020 period due to non-payment.
- Taxpayers can suspend all payments due on accepted Offers in Compromise until July 15, 2020 (interest will continue to accrue).
- Liens and levies initiated by field revenue officers will be suspended, except for with regard to high-income non-filers, and new automatic system liens are suspended during this period.
- Generally, IRS will not start new field, office and correspondence examinations.
In Detail:
On March 25, 2020, IRS unveiled the People First Initiative in response to the difficulty taxpayers are experiencing from COVID-19. While more specifics about the implementation of these provisions will be shared soon, some of the pertinent highlights of the Initiative are below:
- Existing Installment Agreements– For taxpayers under an existing Installment Agreement, payments due between April 1 and July 15, 2020 are suspended. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Deposit Installment Agreement, may suspend payments during this period if they prefer. Furthermore, the IRS will not default any Installment Agreements during this period. By law, interest will continue to accrue on any unpaid balances.
- Offers in Compromise (OIC)– The IRS is taking several steps to assist taxpayers in various stages of the OIC process:
- Pending OIC applications– The IRS will allow taxpayers until July 15 to provide requested additional information to support a pending OIC. In addition, the IRS will not close any pending OIC request before July 15, 2020, without the taxpayer’s consent.
- OIC Payments– Taxpayers have the option of suspending all payments on accepted OICs until July 15, 2020, although by law interest will continue to accrue on any unpaid balances.
- Delinquent Return Filings– The IRS will not default an OIC for those taxpayers who are delinquent in filing their tax return for tax year 2018. However, taxpayers should file any delinquent 2018 return (and their 2019 return) on or before July 15, 2020.
- Field Collection Activities– Liens and levies (including any seizures of a personal residence) initiated by field revenue officers will be suspended during this period. However, field revenue officers will continue to pursue high-income non-filers and perform other similar activities where warranted.
- Automated Liens and Levies– New automatic, systemic liens and levies will be suspended during this period.
- Passport Certifications to the StateDepartment – IRS will suspend new certifications to the Department of State for taxpayers who are “seriously delinquent” during this period. These taxpayers are encouraged to submit a request for an Installment Agreement or, if applicable, an OIC during this period. Certification prevents taxpayers from receiving or renewing passports.
- Private Debt Collection– New delinquent accounts will not be forwarded by the IRS to private collection agencies to work during this period.
- Field, Office and Correspondence Audits– During this period, the IRS will generally not start new field, office and correspondence examinations. We will continue to work refund claims where possible, without in-person contact. However, the IRS may start new examinations where deemed necessary to protect the government’s interest in preserving the applicable statute of limitations.
- In-Person Meetings –In-person meetings regarding current field, office and correspondence examinations will be suspended. Even though IRS examiners will not hold in-person meetings, they will continue their examinations remotely, where possible. To facilitate the progress of open examinations, taxpayers are encouraged to respond to any requests for information they already have received – or may receive – on all examination activity during this period if they are able to do so.
- Unique Situations– Particularly for some corporate and business taxpayers, the IRS understands that there may be instances where the taxpayers desire to begin an examination while people and records are available and respective staffs have capacity. In those instances when it’s in the best interest of both parties and appropriate personnel are available, the IRS may initiate activities to move forward with an examination — understanding that COVID-19 developments could later reduce activities for an agreed period.
- General Requests for Information– In addition to compliance activities and examinations, the IRS encourages taxpayers to respond to any other IRS correspondence requesting additional information during this time if possible.
The information provided in the above does not, and is not intended to, constitute legal advice; instead, all information and content provided in the above is for general informational purposes only. Readers of this material should contact an experienced tax attorney to obtain advice with respect to any particular legal matter.
McMahon & Tivnan, PC is responsible for this content. McMahon & Tivnan, PC represents individuals, estates and businesses with federal and state tax controversies, including audits, appeals, litigation and foreign transaction reporting. Collectively, McMahon & Tivnan, PC’s Boston-based tax attorneys have more than 100 years of experience investigating and defending IRS and state tax matters.