IRS Unveils People First Initiative on March 25, 2020

Covid-19 Legislation Update From a Tax Perspective

In further response to the Covid-19 pandemic, the Internal Revenue Service (IRS) has announced that they are working on new legislation to pursue “unprecedented actions to ease the burden on people facing tax issues. ” As part of the new legislation, the IRS has implemented a program called the “People First Initiative” that will provide immediate relief to taxpayers, ranging from postponing certain payments to limiting collection enforcement activity.

While the specifications of the People First Initiative (hereafter referred to as “the program”) will be released by the IRS soon, below is a summary the highlights of the program that were published today. See IR-2020-59.

For Taxpayers in Existing Installment Agreements:

All payments that are due between April 1, 2020 through July 15, 2020, including Direct Deposit Installment Agreements, may be suspended. Thus, a taxpayer will not be in default of a current Installment Agreement if the taxpayer prefers to suspend payments between April 1, 2020 through July 15, 2020. However, by law, interest will continue to accrue on the unpaid balance.

For Offers in Compromise (“OIC”):

A.  Pending OICs:
An OIC Agent usually follows strict deadlines for additional information and/or documents needed during an OIC examination and may close an OIC case if the information and/or documents are not provided by such date. The program automatically extends the deadline to July 15, 2020 to provide any requested additional information and/or documents to the OIC Agent. Furthermore, an OIC Agent may not close any pending OIC case before July 15, 2020, without the taxpayer’s consent.

B.  New OICs:
The IRS has not changed the current OIC requirements; i.e the IRS will review the OIC application and supporting documents to determine a taxpayer’s reasonable collection potential.

C.  OIC Payments:
If an offer was accepted, the taxpayer may suspend the payment(s) that are due after April 1, 2020 until July 15, 2020; however, interest will accrue on the unpaid balance of the accepted offer amount.

D.  Impact of Delinquent Tax Returns and OICs:
The IRS will not default an OIC if a taxpayer did not file a 2018 tax return. Taxpayers must file their 2018 and 2019 returns on or before July 15, 2020.

IRS Collection Activity

1. Liens and Levies, whether through a Revenue Officer, or through the IRS automated collection system, will be suspended between April 1, 2020 through July 15, 2020.
2. Field Revenue Officers will continue to pursue “high income non-filers and perform other similar activities where warranted.”
3. The IRS will suspend seriously delinquent passport certifications to the Department of State between April 1, 2020 through July 15, 2020.
4. The IRS will not forward any new cases to private collection agencies for enforcement action between April 1, 2020 through July 15, 2020.

IRS Audits

A.  New Audits:
The IRS will not commence any new examinations between April 1, 2020 through July 15, 2020; however, the IRS may commence an examination to protect the government’s interest in preserving any applicable statute of limitations.

B.  Current Audits:
All in-person audits and in-person conferences are suspended until July 15, 2020. IRS Agents will continue their examinations remotely, where possible. In addition, IRS Agents may reduce examination activities for unique situations.

C.  Earned Income Tax and Wage Verification Examinations:
Taxpayers are granted an extension to July 15, 2020 to verify their qualification of an earned income tax credit, or to verify wages. The IRS will not deny any credits between April 1, 2020 to July 15, 2020, due to the taxpayers’ failure to provide the requested information.

Appeals

Appeal Agents will continue to work on appeal cases and taxpayers must promptly respond to any outstanding requests. Although in-person conferences are suspended; Appeal Agents will conduct telephone or video conferences.

Statute of Limitations

The IRS will continue to take steps to protect all applicable statute of limitations and encourage taxpayers to cooperate in extending the statutes, when necessary. If the taxpayer does not cooperate, the IRS will issue a Notice of Deficiency, or pursue other action to protect the interest of the government.

While this new IRS program is a great step in assisting taxpayers, it may not be enough for taxpayers who lost significant income, or even lost their business during this pandemic. Berkman Henoch is dedicated to helping our clients completely resolve their tax controversies. Please contact our office if you need any further assistance with the IRS, including options for individuals or businesses that do not have the ability to pay their tax obligations.

Lastly, please review our prior article regarding IRS payroll tax credits here.