COVID-19 - IRS MONTHLY INSTALLMENT PAYMENTS and OFFERS IN COMPROMISE

 

Are you one of the 1 million taxpayers on an Installment Agreement with the IRS?  You may suspend your payments that are due April 1 through July 15, 2020, interest will continue to accrue but you will not be in default for suspending payments.  If your payment is directly debited from your account go to your bank and stop the payment or the IRS will continue to take the money from your account. 

 

If you are unable to fully pay your tax liability for 2019, you can resolve your liability with a monthly payment agreement with the IRS.  Contact a tax professional or visit the IRS website at www.irs.gov for instructions.

 

Another option to pay your tax liability, when all of your liabilities exceed your net worth is an Offer in Compromise (OIC).

 

If you have submitted an OIC with the IRS to resolve your tax debt, there is an extension to provide any additional information to support your OIC and the IRS will not close any pending OIC requests before July 15, 2020.

 

If your OIC has already been accepted, you have the option of suspending all payments until July 15, 2020, interest will continue to accrue on your debt.  Also, if you are delinquent in filing your 2018 and 2019 return, the IRS will not default your OIC if you file your 2018 and 2019 returns on or before July 15, 2020.

 

Did you fail to file your tax returns for the last three years?  You may be due a refund.  Contact a tax professional to prepare your returns, and if you are due a refund, file your taxes.  If you discover you owe taxes, take advantage of the opportunity to resolve any outstanding liability with an Installment Agreement or OIC. 

 

If you discover you owe taxes, contact a knowledgeable bankruptcy attorney who can advise you of your remedies for tax debt through bankruptcy before you enter an installment agreement, OIC or sign any other agreements with the IRS regarding you tax liability. 

 

The IRS has various ways to collect taxes and has suspended Automatic System Collections and Field Revenue Officer Collections until July 15, 2020 for liens ( on your real property) and levies (personal property, usually bank levies).

 

Did you apply for a new or renewal of your passport and owe taxes?   The IRS issues Certifications to the Department of State that prevents you from receiving and/or renewing your passport.  The IRS will suspend new Certifications to the Department of State for taxpayers who are “seriously delinquent” until July 15, 2020.  If you are a “seriously delinquent” taxpayer and you submit a request for an Installment Agreement or OIC on or before July 15, 2020 you may be able to prevent the IRS from issuing a Certification to the Department of State.

    

Are you involved in an audit?  The IRS has suspended in person meetings and will conduct examinations remotely, where possible and you respond to any requests for information you have already received, or may receive on or before July 15, 2020, if you are able to do so.  

 

Will there be new audits?  Until July 15, 2020, the IRS does not plan on starting any new audits, unless necessary to preserve a statute of limitations.  One example of a statute of limitations is the IRS has three years to audit your return.  The flip side of this statute of limitations is that you have three years to file a return and request a refund.  The IRS has stated they will continue to work refund claims during this period.

 

Did you receive a general request for information from the IRS?  Do your best to respond to any other IRS correspondence requesting additional information during this time if possible.  If you are working with a tax professional, be sure you provide any information to your tax professional before you provide to the IRS.  It is also wise that all verbal communications regarding your IRS tax liability are handled by your tax professional, not you.

 

Have you received a request to verify your Earned Income Tax Credit and/or Wages?  The IRS has extended the deadline to respond until July 15, 2020; however, exercise your best effort to obtain and submit the requested information and if you are unable to obtain the information, reach out to the IRS with the reason the information is not available.  After July 15, 2020 the IRS will deny your Earned Income Tax Credit and Wage credit for failure to provide the information. 

 

Are you involved in an Appeal of your Tax Liability?  Appeals are not currently on hold.  Conferences are currently over the telephone or by videoconferencing, not in-person.  You are encouraged to promptly respond to any outstanding requests for information.  The IRS will issue Notices of Deficiency and pursue other similar actions to protect all applicable statute of limitations unless you agree to extend the statute of limitations.  Do not sign any agreements without first consulting with your tax professional.  If a statutory period is not set to expire during 2020, the IRS is unlikely to pursue issuing a Notice of Deficiency and/or other similar actions until at least after July 15, 2020.

 


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