In addition to extending tax filing and payment deadlines to July 15, 2020, the IRS announced on Wednesday that it would implement “a sweeping series of steps to assist taxpayers by providing relief on a variety of issues ranging from easing payment guidelines to postponing compliance actions.”
These new changes include postponing certain payments related to installment agreements and offers in compromise, as well as limiting certain enforcement actions. The projected start date will be April 1 and the effort will initially run through July 15. During this period, to the maximum extent possible, the IRS will avoid in-person contacts.
More specifics about the implementation of these provisions will be available soon. In the meantime, highlights of the key actions in the initiative include the following:
Existing Installment Agreements – For taxpayers under an existing installment agreement, payments due between April 1 and July 15, 2020, are suspended. Taxpayers with automatic payment arrangements, as in the case of a direct debit agreement, may also suspend payments during this period. The IRS will not default any installment agreements during this period, but interest will continue to accrue on any unpaid balances.
New Installment Agreements – Taxpayers who are not able to fully pay their federal taxes can still resolve outstanding liabilities by entering into a monthly payment agreement at www.irs.gov.
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 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 liens and levies will be suspended during this period.
Passport Certifications to the State Department – The IRS will suspend new certifications to the Department of State for taxpayers who are “seriously delinquent” during this period. Certification prevents taxpayers from receiving or renewing passports. Taxpayers who are seriously delinquent are encouraged to submit a request for an installment agreement or, if applicable, an OIC during this period.
Private Debt Collection – New delinquent accounts will not be forwarded by the IRS to private collection agencies during this period.
Existing Audits – The IRS will continue to work field, office, and correspondence audits that are already underway. However, in-person meetings will be suspended. 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.
New Audits – During this period, the IRS will generally not start new field, office, or correspondence audits. Where possible, taxpayer refund claims will continue to be processed, 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.
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.
Earned Income Tax Credit and Wage Verification Reviews – Taxpayers have until July 15, 2020, to respond to IRS requests to verify that the taxpayer qualifies for the earned income tax credit or to verify their income. The IRS will not deny these credits prior to July 15, 2020, for a failure to provide requested information.
Statute of Limitations – The IRS will continue to take steps where necessary to protect all applicable statutes of limitations. In instances where statute expirations might be jeopardized, and absent agreement by the taxpayer to extend the statute, the IRS will issue a Notice of Deficiency and pursue other similar actions to protect government interests. Where a statutory period is not set to expire during 2020, the IRS is unlikely to pursue the foregoing actions until at least July 15, 2020.
Further updates will be provided as developments are confirmed, including with regard to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which has just been signed into law.
This update was prepared by attorney Doug Smith, who practices in the areas of estate planning, estate administration, tax law, and business and nonprofit planning. It does not constitute legal advice and has been prepared for informational purposes only. Please contact Doug directly with questions about how these provisions affect you.