To stem the economic fallout from the COVID-19 global pandemic, the federal government passed a 2-trillion-dollar stimulus package to provide aid to all levels of government, hospitals, businesses, and checks payable to taxpayers.
Additionally, the IRS has confirmed that the tradition April 15th tax deadline is pushed to July 15, 2020 without risk of additional penalties and interest.
The People First Initiative, recently implemented by the IRS, will establish a series of new rulings for taxpayers with tax liability across the board.
However, those who have tax debt accruing interest from previous years have been curious as to if this new bill will reduce the tax liability for Americans.
TaxRise is here to answer any question you may have regarding your tax debt and the new Stimulus Bill.
Will the IRS take your Economic Impact Payment to pay a current tax debt?
If you do have a current IRS or state tax liability, you may still be eligible to receive your economic impact payment.
However, some taxpayers with delinquent tax returns will not be eligible for the People First Initiative until they are fully complaint with the IRS.
This is because the IRS will use your 2018 or 2019 tax returns to determine your eligibility to receive a payment, which means that if you were required to file a return for those years and have not, you must file immediately to receive your economic impact payment.
What will happen to my Installment Agreement?
Taxpayers currently in an installment agreement can expect to see a suspension in their payments from April 1 to July 15. Taxpayers also have the option to suspend payments if they are unable to comply with the terms of an Installment Payment Agreement, such as a Direct Debit Installment Agreement.
For individuals who are unable to pay their current tax liability, an Installment agreement will allow them to pay off their debts via a monthly payment agreement with the IRS. Click here to learn more about Installment Agreements.
Applying for an installment agreement without professional representation is possible but depending on the taxpayer’s liability amount and financial history, your monthly payments may be lower when working with a tax professional.
What will happen to my Offer in Compromise?
For taxpayers in the various stages of the Offer in Compromise (OIC) journey, the IRS is taking sweeping measures to benefit them.
For pending OIC applications, the IRS will be extending the deadline to submit requested information until July 15. This also means the IRS will not close any unresolved or pending applications before said date, unless the taxpayer says so.
All payments for accepted OICs will also be extended until July 15th.
Furthermore, OICs will not be defaulted for delinquent return filings before July 15 for 2018 and 2019 returns. It is encouraged that taxpayers should file their 2018 and 2019 returns before this deadline.
If you are facing a tax liability that exceeds your current gross income, an OIC can reduce your unpaid balance by reducing your debt to a rate that best fits your financial situation; better known as a “Fresh Start”.
Learn more here about an Offer in Compromise and how you can qualify for one.
How will field, office and correspondence audits be affected?
The IRS is taking every measure possible to ensure the health and safety of taxpayers by conducting their field, office, and correspondence audits with minimal in-person contact.
Until further notice, in-person meetings will be suspended. Remote examinations will occur by examiners wherever possible.
In addition to these measures, the IRS strongly encourages taxpayers to respond to any requests for information to help facilitate each case.
For more information on these topics and for other unique situations, click here.
Other Important Changes:
Any new or systemic Liens and/or Levies will also be suspended for the time being.
For taxpayers who are considered “seriously delinquent”, the IRS will suspend any new certifications for the remaining period. Any taxpayer who falls into this category in reminded and encouraged to enter into an Installment Agreement or apply for an Offer In Compromise.
The IRS will not forward any new delinquent accounts to private collection agencies at this time.
Taxpayers have until July 15, 2020 to verify to the IRS they are qualify for the Earned Income Tax Credit or to confirm their income. If the taxpayer is unable to verify their credentials or provide appropriate documents for this credit, they are encouraged to notify the IRS before the deadline. No cases will be denied this credit for failure to provide requested information until July 15.
Case workers will continue business as usual. However, most case work will be conducted remotely (video/over the phone conferences). Any requests for documentation sent by the Office of Appeals should be responded to in a timely manner to ensure a smooth process.
The IRS will continue to take the appropriate measures to stay compliant and protect the applicable statutes of limitations. In situations where certain statutes may be compromised, taxpayers are encouraged to extend such statutes. Otherwise, Notices of Deficiency will be issued by the IRS and similar actions will be pursued to protect the interests of the government in preserving such statutes. Where a statutory period is not set to expire during 2020, the IRS is unlikely to pursue the foregoing actions until at least July 15, 2020.
Practitioners are reminded that PPS wait times may be significantly longer, depending on staffing levels and allocations going forward. The IRS will continue to monitor this as situations develop.
“The IRS will continue to review and, where appropriate, modify or expand the People First Initiative as we continue reviewing our programs and receive feedback from others,” Rettig said. “We are committed to helping people get through this period, and our employees will remain focused on these and other helpful efforts in the days and weeks ahead. I ask for your personal support, your understanding – and your patience – as we navigate our way forward together. Stay safe and take care of your families, friends and others.”
For more information on these topics and for other unique situations, please visit the IRS website.
Who is eligible to benefit from these new laws?
It is advised that if you are not fully compliant with the IRS, now is the time to be so. If you have yet to file your 2018 or 2019 tax returns, it is essential to do so to receive your economic impact payment.
If you were not required to file a tax return for years 2018 and 2019 because you are a current social security recipient or did not make enough money to file, you can track your stimulus payment here.
Learn how easy it is to qualify for tax savings.