Submitted By George R. Crouse, Jr., EA, ATA, ATP, MST, MSA
Due to COVID-19, the IRS’ People First Initiative provides relief to taxpayers on a variety of issues from easing payment guidelines to delaying compliance actions. This relief is effective through the filing and payment deadline, Wednesday, July 15, 2020.
-Existing Installment Agreements-Under an existing Installment Agreement, payments due between April 1 and July 15, 2020 are delayed. Those currently unable to meet the terms of an Installment Payment Agreement or Direct Deposit Installment Agreement may cancel payments during this period with no default. By law, interest will continue to accumulate on any unpaid balances. TAX PLANNING TIP-Check with your clients that are in payment agreements and monitor their status before and after the deadline to ensure they stay in compliance with the agreement. What is not clear from this initiative is if in the event your clients skip their required payments and wish to resume later, will there be a reinstatement fee for continuing the agreement after the deadline.
-New Installment Agreements-Taxpayers who are unable to pay their Federal taxes in full can establish a monthly payment agreement, by filing Form 9465 with the electronically filed tax return.
-Pending Offer-in-Compromise applications-Taxpayers have until July 15, 2020 to provide additional information for a pending OIC. The agency generally will not close any pending OIC request before July 15, 2020 without the taxpayer’s consent. TAX PLANNING TIP-Monitor all OIC pending agreements to be sure clients have provided their pertinent personal and/or corporate information as requested, so that the OIC does not become rejected. Remind clients that the $186 or $56 user fee, as applicable, will need to be paid again after the Service rejects the offer, if proper and timely information is not received.
-OIC Payments-Taxpayers can delay all payments on accepted OICs until July 15, 2020. Interest may accrue, and missed payments are due when the suspension period ends. Taxpayers can call the number on their acceptance letter to address their needs. TAX PLANNING TIP-Monitor all OIC payment agreements to ensure clients comply and make up all missed payments on the extended due date. If payments are not made up, the OIC may be voided and all taxes forgiven can be reinstated.
-Delinquent Return Filings-The IRS will not default an OIC for taxpayers who are delinquent in filing their tax return for 2018. However, they should file any delinquent 2018 and their 2019 return by July 15, 2020. Again, monitor closely so that clients do not lose the protection of the OIC.
-Non-Filers-More than one million households who have not filed tax returns in the last three years are owed refunds. The deadline to get refunds on 2016 tax returns is July 15, 2020. Those who owe taxes on delinquent returns may visit IRS.gov for payment options. The longer the debt is owed, the more penalties and interest accrue. PRACTICE TIP-Check your client lists to follow up on clients who have not filed since 2015 (including clients in pending files who have not have given all their information to complete the return(s)), so they can receive any refund they may be entitled to. I personally sent 100 letters to clients and have received a very good response rate.
-Field Collection Activities-IRS stopped field revenue officer enforcement actions, such as liens and levies. Taxpayers experiencing a hardship due to a levy should reach out to their assigned IRS contact or fax their information to (855) 796-4524. Revenue officers will continue to pursue high-income non-filers and perform other similar activities where necessary. Please note that some clients have experienced either no response or automated messages stating that no one is available at this time due to the crisis, therefore, clients should be patient during this time frame, until the furloughed workers return to their posts of duty.
-Certifications to the State Department-IRS has delayed new certifications of taxpayers who are seriously considered delinquent. This affects a taxpayer’s ability to receive or renew a passport. Existing certifications will remain in place unless their tax situation changes.
-Private Debt Collection-IRS will not forward new delinquent accounts to private collection agencies during this period.
Source: IRS Tax Tip 2020-56, May 13, 2020