The Internal Revenue Service continues to respond in the wake of the COVID-19 pandemic. On the heels of the decision to move tax day to July 15, the agency has taken additional measures to relieve taxpayer burdens.
In News Release IR-2020-59, the IRS announced its “People First Initiative” that, among other things, eases certain payment guidelines and postpones compliance actions. M&R provides the details here in question and answer form.
Q. When will the “People First Initiative” come online?
A. The IRS has targeted April 1 as the start date of the program, with the initiative running—at least initially—through July 15.
Q. What is the IRS doing for taxpayers currently making installment payments?
A. Payments due between April 1 and July 15 under existing installment agreements are being suspended. In addition, under the “People First Initiative,” the IRS will not find taxpayers in default of any installment agreements during this period. That being said, interest will continue to accrue on any unpaid balances.
Of note, taxpayers unable to pay their federal taxes in full may continue to enter into monthly payment agreements with the IRS, consistent with historic practice.
Q. Are offers in compromise (OIC) impacted by the “People First Initiative”?
A. Yes, the IRS has made its own compromises relative to OICs as follows:
- Pending OIC Applications – The time period to provide requested additional information to support a pending OIC has been extended to July 15, and the IRS will not close any pending OIC request before then without the taxpayer’s consent
- OIC Payments – Taxpayers may suspend all payments on accepted OICs until July 15 (interest will continue to accrue on any unpaid balances)
- Delinquent Return Filings – The IRS will not default an OIC for taxpayers who are delinquent in filing their 2018 tax return; however, the IRS encourages taxpayers to file any delinquent 2018 return, in addition to their 2019 returns, on or before July 15
- New OIC Applications – The OIC process is designed to resolve outstanding tax liabilities by providing a “Fresh Start” for those facing a tax liability exceeding their net worth
- Non-Filers – Taxpayers who have not filed their tax returns for the years prior to 2019 should do so and should also consider entering into an installment agreement or OIC to the extent necessary (and especially if they are “seriously delinquent”)–procedures historically designed to prevent delinquent taxpayers from receiving or renewing passports will also be temporarily suspended
Q. Will field collection activities be scaled back for a time?
A. Yes, while IRS field revenue officers will continue pursuing high-income non-filers when they deem appropriate, they will be suspending liens and levies—including seizures of personal residences—until at least July 15. At the same time, the IRS will suspend new automatic, systemic liens and levies until at least July 15 as well.
Q. Does the “People First Initiative” impact private debt collection?
A. Yes, the IRS will not forward new delinquent accounts to private collection agencies.
Q. Has the IRS changed its position on field, office, and correspondence audits?
A. It has. Generally, the IRS will not begin new field, office, and correspondence examinations; however, it will continue to work refund claims (where possible) and may start new examinations in the interest of protecting the government’s interest in preserving the applicable statute of limitations. More specifically:
- In-person meetings will be suspended, though IRS examiners will continue their examinations remotely where possible
- The IRS may initiate activities to move forward with an examination, where in the best interest of both parties, for certain corporate and business taxpayers while people and records are available for examination
- Taxpayers are encouraged to respond to IRS correspondence requesting additional information–this is particularly true with regard to outstanding requests for information for cases in the Independent Office of Appeals
- Regarding the Office of Appeals, it is not holding in-person conferences with taxpayers; however, it may proceed with these conferences remotely over the phone or by video-conference
Q. What about Earned Income Tax Credit and wage verification reviews?
A. Taxpayers now have until July 15 to respond to the IRS in order to verify that they qualify for the Earned Income Tax Credit and to verify income. The IRS will not deny these credits for failure to provide requested information, until at least July 15.
Q. Does the “People First Initiative" affect the statute of limitations?
A. The IRS will take steps necessary to protect the applicable statute of limitations, and it encourages taxpayers to cooperate in extending such a statute where expirations would otherwise occur during this time period.
Q. What can I expect from the Practitioner Priority Service (PPS)?
A. Depending on staffing levels and allocations, wait times for the PPS may be more significant than normal.
Q. Will the IRS be making any other coronavirus-related changes?
A. The IRS intends to review, modify and/or expand the "People First Initiative" as it receives feedback, and yes, it expects to issue additional guidance.
This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.
