As taxpayers face multiple challenges posed by the COVID-19 outbreak, the IRS has unveiled a large series of steps providing relief on a number of fronts, ranging from easing payment guidelines to postponing compliance actions.
"The IRS is taking extraordinary steps to help the people of our country," said IRS Commissioner Chuck Rettig. "In addition to extending tax deadlines and working on new legislation, the IRS is pursuing unprecedented actions to ease the burden on people facing tax issues. During this difficult time, we want people working together, focused on their well-being, helping each other and others less fortunate.”
Retting said the People First Initiative provides immediate relief to help people facing uncertainty over taxes. "We are temporarily adjusting our processes to help people and businesses during these uncertain times. We are facing this together, and we want to be part of the solution to improve the lives of all people in our country,” the commissioner added.
People First includes changes on issues ranging from postponing installment agreement-related payments and offers in compromise to collection and limiting certain enforcement actions.
The initiative projects a starting date of April 1 and initially runs through July 15. During this time the IRS will avoid in-person contacts as much as possible to limit the spread of the virus.
While specifics of the initiative are still being nailed down, an IRS release had some details about some of the programs affected by this new move:
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 time. By law, however, interest will continue to accrue on any unpaid balances.
New Installment Agreements
The IRS reminds people unable to fully pay their federal taxes that they can resolve outstanding liabilities by entering into a monthly payment agreement with the IRS. See IRS.gov for further information.
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.
Non-Filers Need to Get Current
Those who have not filed their tax returns for years before 2019 should file their delinquent returns. More than a million households haven’t filed during the last three years, yet are owed refunds. They still have time to claim those refunds.
The IRS recommends contacting a tax pro to tap into the options available for these late filers. Time, however, is limited by law. The IRS says once delinquent returns have been filed, taxpayers with tax liabilities should resolve any outstanding tax due and take advantage of the IRS’ Installment Agreement or an Offer in Compromise to get a “Fresh Start.” Check IRS.gov for details.
Other areas included in the IRS People First Initiative include modifications to field collection activities and automatic liens.
Liens and levies (including any seizures of a personal residence) initiated by field revenue officers will be suspended during the initiative. However, field revenue officers will continue to pursue high-income non-filers and perform other similar activities where warranted.
New automatic, systemic liens and levies will be suspended while the initiative is in place.
Passport certifications are also covered. 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.
Debt collection efforts by private contractors will be on hold during the period. The IRS says it will generally not start new field, office or correspondence examinations during the period. They will continue to work refund claims where possible without face-to-face contact. Some new examinations, however, may be started where the statute of limitations is a factor.
For a full listing of the proposed actions during the initiative period, see the IRS People First Initiative release on the IRS website.