Navigating IRS Changes Amidst COVID-19: A Comprehensive Overview

Navigating IRS Changes Amidst COVID-19: A Comprehensive Overview

In response to the unprecedented challenges posed by the COVID-19 pandemic, the IRS introduced the People First Initiative, as outlined in Information Release IR 2020-59 on March 25, 2020. Aimed at providing immediate relief, this initiative primarily focuses on alleviating payment guidelines and postponing compliance actions. IRS Commissioner Chuck Rettig emphasized the IRS's commitment to aiding individuals and businesses during these uncertain times. The initiative, effective from April 1, 2020, through July 15, 2020, reflects the IRS's adaptive measures to support the nation collectively.

Key Actions under the People First Initiative

1. Existing Installment Agreements:

  • Payments due between April 1, 2020, and July 15, 2020, are suspended for taxpayers under existing installment agreements.

2. New Installment Agreements:

  • Taxpayers unable to fully pay their federal taxes are encouraged to establish monthly payment agreements with the IRS.

3. Offers in Compromise (OIC):

  • Pending OIC applications have an extended deadline until July 15, 2020, for providing additional requested information.
  • Taxpayers with accepted OICs have the option to suspend payments until July 15, 2020, though interest continues accruing.
  • The IRS will not default OICs for taxpayers delinquent in filing their 2018 tax return.
  • New OIC applications are highlighted as a means for individuals facing liabilities exceeding their net worth to attain a fresh start.

4. Non-Filers:

  • Individuals who haven't filed returns for tax years preceding 2019 are urged to file delinquent returns.
  • Upon filing, taxpayers with liabilities can consider installment agreements or offers in compromise for a fresh start.

5. Field Collection Activities:

  • Liens and levies initiated by field revenue officers, including seizures of personal residences, will be suspended.
  • However, high-income non-filers will still be pursued by field revenue officers.

6. Automated Liens and Levies:

  • New automatic systemic liens and levies will be suspended during the People First Initiative period.

7. Passport Certifications:

  • The IRS will suspend new certifications to the Department of State for seriously delinquent taxpayers during this period.

8. Private Debt Collection:

  • New delinquent accounts will not be forwarded to private collection agencies for the duration of the initiative.

9. Field, Office, and Correspondence Audits:

  • Generally, new field, office, and correspondence examinations will not commence during this period.
  • In-person meetings for ongoing examinations will be suspended, but remote examinations will continue where possible.
  • Certain exceptions may allow for the initiation of examinations in unique situations.

10. General Requests for Information:

  • Taxpayers are encouraged to respond to any IRS correspondence requesting additional information during this time.

11. Earned Income Tax Credit and Wage Verification Reviews:

  • Taxpayers have until July 15, 2020, to respond to the IRS to verify eligibility for the earned income tax credit or income verification.

12. Independent Office of Appeals:

  • Appeals employees will continue working on cases, conducting conferences through telephone or video calls.

13. Statute of Limitations:

  • Steps will be taken to protect applicable statutes of limitations. Taxpayers are urged to cooperate in extending statutes where necessary.

14. Practitioner Priority Service (PPS):

  • Practitioners are cautioned about potential wait times for the PPS, and the situation will be continuously monitored.

The People First Initiative represents a proactive response by the IRS to the economic challenges brought about by the COVID-19 pandemic. By providing relief on various fronts, the IRS aims to support individuals and businesses during these uncertain times. Taxpayers are encouraged to stay informed, consult the IRS website for further updates, and consider seeking professional tax advice tailored to their specific situations. The information provided in this article is for informational purposes only and should not be considered as tax advice. For personalized advice, it is recommended to consult a tax advisor.

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