IRS Adjusts and Suspends Certain Tax Compliance Programs Because of COVID-19

March 26, 2020 by

The IRS announced its new People First Initiative in an effort to help taxpayers facing the challenges of COVID-19. Until now the IRS hasn’t provided much detail on what, if any, relief would be provided to taxpayers already dealing with disputes or collection activity and alternatives at the IRS. The projected start date isn’t until April 1, 2020 and the recent announcement promises more details will be shared soon.

today’s announcement should provide some comfort for taxpayers with existing agreements with the IRS or current and potential disputes.

Installment Agreements

Taxpayers who are paying on existing installment agreements with payments due between April 1 and July 15 will have those payments suspended. Interest will continue to accrue, so if you can still pay it might be worth it to do so. However, if you take advantage of the suspension your agreement will not be defaulted – which is the usual result of a missed payment. The IRS is encouraging taxpayers with outstanding tax liabilities to still seek installment agreements – where appropriate.

Offers in Compromise (OIC)

Another popular collection alternative is an Offer in Compromise (OIC) which asks the IRS to agree to an amount that is less than the amounts owed. If your OIC is currently pending the IRS is allowing taxpayers until July 15th to provide any requested information and promises it will not close the request without taxpayer consent before July 15th. This is important because collection action is usually suspended while an OIC request is pending. If you already have an accepted OIC the payments are suspended until July 15th, same as installment agreements, but interest continues to accrue. Also, the IRS will not default an existing OIC for failure to file a delinquent 2018 or 2019 return so long as they are filed by July 15, 2020. The IRS, again, is encouraging taxpayers whose amounts owed exceed their net worth to consider filing an OIC to resolve their tax liabilities.

Tax Collection and Audit Activity

Automatic and systemic (computer generated) and field initiated (revenue officer generated) liens and levies will be suspended during the April 1, 2020 through July 15, 2020 time-frame. Also, new delinquent accounts will not be forwarded to private collection agencies during this time frame. The IRS will generally not start new field, office and correspondence examinations during this period. All of these assurances are done so with the caveat that the IRS will continue to take all necessary steps to protect applicable statutes of limitation. In most situations a taxpayer can voluntarily extend the statute of limitations and will, likely, be asked to do so if there is a statute of limitations issue.

If your case is already under audit, in-person meetings are suspended and conferences may continue as much as possible remotely. The IRS is requesting that any pending or future requests for information be answered during this time frame. However, the notice indicates that this request is only “if they are able to do so.” Therefore, if there is an issue with responding within the requested time, then taxpayers should contact the revenue agent themselves or through their authorized representative.

IRS Office of Appeals

The IRS Office of Appeals is an independent office of the IRS whose function is to help taxpayers resolve their disputes without the need for litigation. A large number of tax disputes are resolved at IRS Appeals and they are continuing to work their cases during this time frame. IRS Appeals is not holding in-person meetings, but may hold conferences via telephone or videoconference. Again, if there are statute of limitations concerns then the IRS may not be able to grant extensions of time without potential voluntary extensions.

Practitioner Priority Service

Tax practitioners helping their clients with tax disputes are able to call a special hotline to help them and their clients resolve their tax issues more expeditiously. Unfortunately, the notice indicates what many practitioners have already observed – expect longer wait times. The practitioner hotline still, most likely, represents a better alternative to the general IRS numbers where wait times are almost unbearable. However, tax practitioners and their clients should know that responses to questions without a specifically assigned revenue officer or revenue agent will take additional time.

Taxpayers should consider their specific facts and determine, based on this new guidance, what is the best course of action for them. Brown Fox is available to discuss your specific situation if you have questions about unfiled returns, outstanding tax liabilities, or working with the IRS on a tax dispute or collection alternative.

Joshua D. Smeltzer
joshua@brownfoxlaw.com

Joshua D. Smeltzer is a tax attorney with over sixteen years of experience representing individuals, corporations, receiverships and formerly the U.S. Government in a variety of tax matters. Mr. Smeltzer uses the first-hand knowledge gained inside the government to both advise and represent clients before and during IRS examinations and when defending tax positions at IRS Appeals or in federal court. He has experience handling individual, corporate and partnership tax disputes involving various tax credits and deductions, reporting and disclosure of foreign bank accounts, individual and corporate tax audits and collection, partnership audits and collection, estate and gift tax audits and collection, cryptocurrency tax issues, summons enforcement and many other tax topics.

 

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