Internal Revenue Service Takes Additional Action to Assist Taxpayers Financially Impacted by COVID-19

03.26.2020

On March 25, 2020, the Internal Revenue Service (“IRS”) announced a new initiative designed to assist taxpayers who are financially impacted by COVID-19.

The People First Initiative was created by the IRS in order to help taxpayers face the tremendous financial challenges being felt as a result of the COVID-19 pandemic.  This initiative was announced only days after the IRS extended the federal income tax filing due date from April 15, 2020 to July 15, 2020.  The initiative covers a variety of areas and temporarily adjusts many IRS processes and procedures in order to provide relief for businesses and individuals who may be financially impacted by COVID-19.

While additional guidance will be issued soon, the key points of the People First Initiative are as follows:

Installment Agreements and Offers in Compromise

Businesses and individuals with existing Installment Agreements with the IRS will have their payments suspended between April 1, 2020 and July 15, 2020 (the “Suspension Period”).  This Suspension Period applies to Direct Deposit Installment Agreements as well, although the IRS guidance states that taxpayers with Direct Deposit Installment Agreements “may suspend payments” if they prefer to do so.  Given this language, it appears that taxpayers with Direct Deposit Installment Agreements will need to take affirmative action to suspend the payments during the Suspension Period.

The IRS will not cause an Installment Agreement to go into default due to a nonpayment during the Suspension Period.  However, interest will continue to accrue on the unpaid balance of the obligation.

Taxpayers in the Offer in Compromise (“OIC”) process will have extended periods to provide information to the IRS.  Taxpayers with accepted OICs will have the option of suspending payments until July 15, 2020.  As was the case with Installment Agreements, interest will continue to accrue.

Collection Activities

Liens and levies initiated by field revenue officers are generally suspended^[1] during the Suspension Period, as are automatic liens and levies. 

Exams and Audits

The IRS will generally not initiate new examinations and audits during the Suspension Period, unless necessary in order to preserve the applicable statute of limitations.  However, if a taxpayer requests to have a previously scheduled examination begin, the IRS may proceed with the examination if it is determined it is in the best interest of both the IRS and the taxpayer to do so. 

IRS Office of Appeals

The IRS Office of Appeals will remain open and continue to work on appeals cases.  Generally, appeals conferences will be held telephonically.

Private Debt Collection

The IRS will not send newly delinquent accounts to private collection agencies during the Suspension Period.  The IRS encourages nonfilers and taxpayers with delinquent accounts to enter into Installment Agreements to get a “fresh start” with the IRS.

As always, the IRS will continue to process refund claims and, of course, claims for the Employment Tax Credit as described in our alert, COVID-19 Relief:  Employment Tax Credit is Now Available for Businesses Subject to Mandated Paid Leave Under the Family First CoronaVirus Response Act.  

According to IRS Commissioner Chuck Rettig, the IRS will continue to review and modify or expand the People First Initiative, as necessary, in an effort to provide assistance to taxpayers during this difficult time. 

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^[1] Revenue Officers may still continue to pursue high-income non-filers and perform “similar activities” to lien and levy activities.

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR presentation/publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.

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