On March 25, 2020 the IRS released IR-2020-59 with information on the operational status of their compliance programs, including expanded relief for payment programs. The news release details IRS Commissioner Chuck Rettig’s thoughts on providing taxpayers additional avenues of temporary relief during the coronavirus pandemic and highlights various IRS compliance and payment programs and the steps taken to provide temporary relief.
Installment Agreement and Offers in Compromise Payments
The IRS granted expanded payment relief for existing Installment Agreements and accepted Offers in Compromise (OIC) applications until July 15, 2020. However, taxpayers should be aware that, by law, interest will continue to accrue on any unpaid balances.
For existing Installment Agreements, payments due between April 1 and July 15, 2020, are suspended, and the IRS will not default any Installment Agreements during this period. Taxpayers unable to comply with an Installment Payment Agreement, including a Direct Debit Installment Agreement, may suspend payments during this period if they prefer.
Mechanically, suspending payments may look different for each taxpayer. If payments are normally made monthly by mailing a check or using the IRS’s online payment service, simply not making the payment is an easy way to suspend payments. Suspending monthly payments initiated through an automated direct debit from the taxpayers’ bank account may be a little more difficult to suspend. The IRS updated guidance on suspending those automated payments saying, “ Taxpayers should contact their bank directly to stop payments if they prefer to suspend direct debit payments during the suspension period. Banks are required to comply with customer requests to stop recurring payments within a specified timeframe. IRS may be able to suspend certain single Direct Debit Installment Agreements (DDIA) payments upon request, but due to disruptions caused by COVID-19 issues it may be difficult to reach an assistor. Note that if payments are stopped, in order to avoid possible default of the agreement once the suspension period expires on July 15, 2020, taxpayers must inform their bank to allow the debits to resume at least two weeks before their next payment is due.” https://www.irs.gov/newsroom/installment-agreement-direct-debit-frequently-asked-questions
Accepted OICs with payments to the IRS currently due on a date before July 15, 2020, will be suspended until the extended date. Once again, the IRS will not default on OICs during this suspended period for taxpayers delinquent in filing their 2018 income tax returns. For those taxpayers, the IRS recommends filing their 2018 income tax returns by July 15, 2020.
Although a date is not provided for when the IRS will continue operations discussed below, the IRS will generally not initiate or pursue certain compliance actions unless it deems those actions necessary to protect the Government’s interest.
- Liens and levies, including those automated issued by IRS systems, will be suspended during this period.
New audits will generally not be initiated by the IRS at this time.
Current audits may continue in some capacity, but all in-person meetings are suspended. The IRS may continue to work remotely on examinations but understand on-site personnel at businesses under examination may not be available to respond to additional requests.
Applying for Installment Agreements or Offers in Compromise can be initiated by the taxpayer through online applications or mailing forms, but it is unlikely the IRS will finalize any at this time.
The IRS expects to offer more detailed guidance as its response plan is refined. Continue to visit our COVID-19 Tax Resource Center for up-to-date information on how the outbreak may impact your tax filing, payments, and planning. We encourage you to share the page with other business owners. Through this unprecedented series of events, you can count on The Tax Warriors® at Drucker & Scaccetti to help. Call on us for assistance.