The Internal Revenue Service has unveiled changes they say will help struggling taxpayers affected by the pandemic settle their IRS tax debts more easily.
The agency says it took a hard look at its collection activities to see how it could offer some relief to taxpayers who owe tax due but are struggling financially because of the pandemic. The goal, IRS says, was to expand taxpayer options for making payments while offering alternatives to resolve the balances owed.
"The IRS understands that many taxpayers face challenges, and we're working hard to help people facing issues paying their tax bills," said IRS Commissioner Chuck Rettig. "Following up on our People First Initiative earlier this year, this next phase of our efforts will help with further taxpayer relief efforts."
"We want people to know our IRS employees are committed to continue helping taxpayers wherever possible, including offering many options for those struggling to pay their tax bills," said Darren Guillot, the IRS Small Business/Self-Employed Deputy Commissioner for Collection and Operations Support. Guillot discussed the new relief options in a new edition of IRS "A Closer Look."
To be sure, taxpayers who owed tax due have long had options through payment plans and other IRS tools; the new Taxpayer Relief Initiative expands on those tools even more.
The revised COVID-related collection procedures will be helpful to taxpayers, especially those who have a record of filing their returns and paying their taxes on time.
Among the highlights of the Taxpayer Relief Initiative:
- Taxpayers who qualify for a short-term payment plan option may now have up to 180 days to resolve their tax liabilities instead of 120 days.
- The IRS is offering flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted Offer in Compromise.
- The IRS will automatically add certain new tax balances to existing Installment Agreements, for individual and out of business taxpayers. This taxpayer-friendly approach will occur instead of defaulting the agreement, which can complicate matters for those trying to pay their taxes.
- To reduce burden, certain qualified individual taxpayers who owe less than $250,000 may set up Installment Agreements without providing a financial statement or substantiation if their monthly payment proposal is sufficient.
- Some individual taxpayers who only owe for the 2019 tax year and who owe less than $250,000 may qualify to set up an Installment Agreement without a notice of federal tax lien filed by the IRS.
Additionally, qualified taxpayers with existing Direct Debit Installment Agreements may now be able to use the Online Payment Agreement system to propose lower monthly payment amounts and change their payment due dates.
The IRS has more details on the Taxpayer Relief Initiative.
The IRS offers options for short-term and long-term payment plans—including Installment agreements—through the Online Payment Agreement (OPA) system.
In general, this service is available to individual taxpayers who owe $50,000 or less in combined income tax, penalties and interest or businesses that owe $25,000 or less combined that have filed all tax returns. The short-term payment plans are now able to be extended from 120 to 180 days for certain taxpayers.
Installment Agreement options are available to those who cannot fully pay their balance now, but can pay their balance over time. The Installment Agreement options were expanded to remove the requirement for financial statements and substantiation in more circumstances for balances owed up to $250,000 if the monthly payment proposal is sufficient.
The IRS also modified Installment Agreement procedures to further limit the requirements for Federal Tax Lien determinations for some taxpayers who only owe taxes for tax year 2019.
In addition to payment plans and Installment Agreements, the IRS also offers other tools to assist taxpayers who owe taxes:
Temporarily Delaying Collection — Taxpayers can contact the IRS to request a temporary delay of the collection process. If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer's financial condition improves.
Offer in Compromise — Certain taxpayers qualify to settle their tax bill for less than the amount they owe by submitting an Offer in Compromise. To help determine eligibility, use the Offer in Compromise Pre-Qualifier tool. Now, the IRS is offering additional flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted offer in compromise.
Relief from Penalties — The IRS is highlighting reasonable cause assistance available for taxpayers with failure to file, pay and deposit penalties. First-time penalty abatement relief is also available for the first time a taxpayer is subject to one or more of these tax penalties.
All taxpayers can access important information on IRS.gov. Many taxpayers requesting payment plans, including Installment Agreements, can apply through IRS.gov without ever having to talk to a representative.
Requests for relief—including the options in this new initiative—can be made by contacting the phone number on the taxpayer’s IRS notice. Taxpayers can also make the request in writing. But the IRS stresses that if taxpayers get a notice of a balance due, the one thing they should not do is nothing.
"If you're having a tax issue, don't go silent. Please don't ignore the notice arriving in your mailbox," Guillot said. "These problems don't get better with time. We understand tax issues and know that dealing with the IRS can be intimidating, but our employees really are here to help."
Throughout the pandemic, the IRS has adjusted its operations to help ensure the health and safety of employees and taxpayers alike. The adjustments have extended to the relief contained in its People First Initiative.
More information and background on collection relief and procedures can be found in “A Closer Look.”
"While it's been important for us and the nation to resume our critical tax compliance responsibilities, we continue to assess the wide-ranging impacts of COVID-19 and other difficulties people are experiencing," Guillot said.