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IRS announces People First Initiative in response to COVID-19 Pandemic

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IRS announces People First Initiative in response to COVID-19 Pandemic

On March 25, 2020, the Internal Revenue Service announced the “People First Initiative” that will assist taxpayers by providing relief on a variety of tax collection and enforcement issues.

Installment Agreements

For taxpayers under an existing Installment Agreement with the IRS, payments due between April 1 and July 15, 2020 are suspended.  Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Debit Installment Agreement (DDIA), may suspend payments during this period if they prefer. Furthermore, the IRS will not default any Installment Agreements during this period. However, interest will continue to accrue on any unpaid balances.

For taxpayers that are in an installment agreement wherein they send a manual check, those mailing can cease during the relevant time period.  For taxpayers that have their monthly installment payment come directly out of their bank account, the taxpayer will have to take affirmative steps to contact their bank and cancel the payments.  Please ensure sure that the payments are only cancelled through July 15th.

Taxpayers that are interested in establishing new installment agreements during the relevant time period are encouraged to do so.  The IRS will continue to work these requests.

Offers-in-Compromise

The IRS is taking several steps to assist taxpayers in various stages of the Offer-in-Compromise (OIC) process:

  • Pending OIC applications – The IRS will allow taxpayers until July 15th to provide requested additional information to support a pending OIC. In addition, the IRS will not close any pending OIC request before July 15th without the taxpayer’s consent.
  • Payments under accepted OIC applications – Taxpayers have the option of suspending all payments on accepted OICs until July 15th, although by law interest will continue to accrue on any unpaid balances.
  • Delinquent Return Filings – The IRS will not default an OIC for those taxpayers who are delinquent in filing their tax return for tax year 2018.  However, taxpayers should file any delinquent 2018 returns – as well as their 2019 return – on or before July 15th.
  • New OIC applications – The IRS will continue to accept new OIC applications during the relevant time period.

Suspension of Liens and Levies

Liens and levies, including wage garnishments, bank levies, and seizures of personal residences, that are initiated by IRS field revenue officers are suspended during the relevant time period.  However, field revenue officers will continue to pursue “high-income” non-filers and perform other similar activities where warranted.  In addition, new liens and levies that are automatic and  systemic generated from the IRS systems are also suspended.

Passport Certifications

The IRS has the power to send a certification to the Department of State for taxpayers who are “seriously delinquent”, which is currently defined in 2020 as taxpayers with an outstanding balance totaling more than $53,000.  The Department of State then has the ability to deny a new passport application or a passport renewal application.  Under the People First Initiative, the IRS will suspend sending certifications to the Department of State during the relevant time period.

Under current IRS rules, taxpayers that are in a valid installment agreement will not have a certification sent to the Department of State.  Therefore, the IRS is encouraging taxpayers to use this time to set up an installment agreement in order to avoid the certification after the suspended time period expires.

Taxpayer Audits

During this period, the IRS will generally not start new field, office and correspondence examinations. The IRS will continue to work refund claims where possible, without in-person contact. However, the IRS may start new examinations where deemed necessary to protect the government’s interest in preserving the applicable statute of limitations.

  • In-Person Meetings In-person meetings regarding current field, office and correspondence examinations will be suspended. Even though IRS examiners will not hold in-person meetings, they will continue their examinations remotely, where possible. To facilitate the progress of open examinations, taxpayers are encouraged to respond to any requests for information they already have received – or may receive – on all examination activity during this time period if they are able to do so.
  • Unique Situations – Particularly for some corporate and business taxpayers, the IRS understands that there may be instances where the taxpayers desire to begin an examination while people and records are available and respective staffs have capacity. In those instances when it’s in the best interest of both parties and appropriate personnel are available, the IRS may initiate activities to move forward with an examination — understanding that COVID-19 developments could later reduce activities for an agreed period.
  • General Requests for Information – In addition to compliance activities and examinations, the IRS encourages taxpayers to respond to any other IRS correspondence requesting additional information during this time if possible.  
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