On March 25, 2020, IRS announced new sweeping collection and audit policies due to Coronavirus challenges. IRS calls the policies the “People First Initiative.” They will offer immediate relief to help people facing uncertainty over taxes.
They include postponing certain payments related to Installment Agreements and Offers in Compromise to collection and limiting certain enforcement actions.
IRS will temporarily modify those policies. The projected start date will be April 1 and run through July 15. During that period, IRS will avoid in-person contacts.
Highlights of the People First Initiative include:
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.
New Installment Agreements – 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) – IRS is taking several steps to assist taxpayers in various stages of the OIC process:
- Pending OIC applications – IRS will allow taxpayers until July 15 to provide requested additional information to support a pending OIC. In addition, 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 – IRS will not default an OIC for those taxpayers who are delinquent in filing their tax return for tax year 2018. However, clients should file any delinquent 2018 return (and their 2019 return) on or before July 15, 2020.
- New OIC Applications –IRS reminds people facing a liability exceeding their net worth that the OIC process is designed to resolve outstanding tax liabilities by providing a “Fresh Start.” Further information is available at IRS.gov
Non-Filers –IRS reminds people who have not filed their return for tax years before 2019 that they should file delinquent returns. More than 1 million households that haven’t filed tax returns during the last three years are actually owed refunds; they still have time to claim these refunds. Many should consider contacting a tax professional to consider various available options since the time to receive such refunds is limited by statute. Once delinquent returns have been filed, taxpayers with a tax liability should consider taking the opportunity to resolve any outstanding liabilities by entering into an Installment Agreement or an Offer in Compromise with the IRS to obtain a “Fresh Start.” See IRS.gov for further information.
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 State Department – 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 IRS to private collection agencies to work during this period.
Field, Office and Correspondence Audits – During this period, IRS will generally not start new field, office and correspondence examinations. IRS will continue to work refund claims where possible, without in-person contact. However, IRS may start new examinations where deemed necessary to protect the government’s interest in preserving the applicable statute of limitations.
- In-Person Meetings – IRS suspended In-person meetings regarding current field, office and correspondence examinations. 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, clients 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, IRS understands there may be instances where clients 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, 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, IRS encourages clients to respond to any other IRS correspondence requesting additional information during this time if possible.
Earned Income Tax Credit and Wage Verification Reviews – Taxpayers have until July 15, 2020, to respond to IRS to verify that they qualify for the Earned Income Tax Credit or to verify income. These taxpayers are encouraged to exercise their best efforts to obtain and submit all requested information, and if unable to do so, please reach out to IRS indicating the reason such information is not available. Until July 15, 2020, IRS will not deny these credits for a failure to provide requested information.
Independent Office of Appeals – Appeals employees will continue to work their cases. Although Appeals is not currently holding in-person conferences with taxpayers, conferences may be held over the telephone or by videoconference. Taxpayers are encouraged to promptly respond to any outstanding requests for information for all cases in the Independent Office of Appeals.
If you require legal assistance with any of these issues, please feel free to contact Howard L Richshafer.
