To help people facing the challenges caused by the COVID-19 Pandemic, the Internal Revenue Service has announced a sweeping series of steps to assist taxpayers by providing relief on a variety of issues, to include the following:
1. Offers in Compromise (OIC) – The IRS is taking several steps to assist taxpayers in various stages of the OIC process:
- Pending OIC applications – The IRS will allow taxpayers until July 15 to provide requested additional information to support a pending OIC. In addition, the IRS will not close any pending OIC request before July 15, 2020, without the taxpayer’s consent.
- OIC Payments – Taxpayers have the option of suspending all payments on accepted OICs until July 15, 2020, 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 return (and their 2019 return) on or before July 15, 2020.
- New OIC Applications – The IRS reminds people facing a liability exceeding their net worth that the OIC process is designed to resolve outstanding tax liabilities by providing a “Fresh Start.”
- Non-Filers –The IRS reminds people who have not filed their return for tax years before 2019 that they should file their delinquent returns. More than 1 million households that haven’t filed tax returns during the last three years are actually owed refunds; they still have time to claim these refunds. Many should consider contacting a tax professional to consider various available options since the time to receive such refunds is limited by statute. Once delinquent returns have been filed, taxpayers with a tax liability should consider taking the opportunity to resolve any outstanding liabilities by entering into an Installment Agreement or an Offer in Compromise with the IRS to obtain a “Fresh Start.”
2. Field Collection Activities – Liens and levies (including any seizures of a personal residence) initiated by field revenue officers will be suspended during this period. However, field revenue officers will continue to pursue high-income non-filers and perform other similar activities where warranted.
3. Automated Liens and Levies – New automatic, systemic liens and levies will be suspended during this period.
4. Passport Certifications to the State Department – IRS will suspend new certifications to the Department of State for taxpayers who are “seriously delinquent” during this period. These taxpayers are encouraged to submit a request for an Installment Agreement or, if applicable, an OIC during this period. Certification prevents taxpayers from receiving or renewing passports.
5. Private Debt Collection – New delinquent accounts will not be forwarded by the IRS to private collection agencies to work during this period.
6. Field, Office and Correspondence Audits – During this period, the IRS will generally not start new field, office and correspondence examinations. We 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.
7. 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 period if they are able to do so.
8. Independent Office of Appeals – Appeals employees will continue to work their cases. Although Appeals is not currently holding in-person conferences with taxpayers, conferences may be held over the telephone or by videoconference. Taxpayers are encouraged to promptly respond to any outstanding requests for information for all cases in the Independent Office of Appeals.
9. Statute of Limitations – The IRS will continue to take steps where necessary to protect all applicable statutes of limitations. In instances where statute expirations might be jeopardized during this period, taxpayers are encouraged to cooperate in extending such statutes. Otherwise, the IRS will issue Notices of Deficiency and pursue other similar actions 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.
10. Practitioner Priority Service – Practitioners are reminded that, depending on staffing levels and allocations going forward, there may be more significant wait times for the PPS. The IRS will continue to monitor this as situations develop.
J. Eric Butler is a Shareholder in the firm focusing his legal practice in the areas of federal and state taxation, business formations and commercial litigation, tax controversy matters, white collar criminal defense, and estate planning/probate matters. Mr. Butler handles a large range of tax matters for clients across the United States involving the Internal Revenue Service and state taxing authorities, to include examinations of returns, collection of delinquent tax debts, criminal tax matters, international tax compliance and enforcement, and litigation of tax issues in both state and federal courts. Mr. Butler also represents accountants across the United States in malpractice defense, mitigation of potential malpractice claims, and disciplinary proceedings.
Mr. Butler received a three-year appointment (2013 through 2015) to the Taxpayer Advocacy Panel, which is a federal advisory panel established in 2002 under the authority of the U.S. Department of the Treasury. The Taxpayer Advocacy Panel (TAP) is made up of volunteers appointed by the Secretary of the Treasury to represent all 50 states, the District of Columbia and Puerto Rico. TAP members are assigned to separate Project Committees and include at least one representative from each state. Mr. Butler served on the Tax Forms & Publications Project Committee during his three-year term, which works to provide feedback to Internal Revenue Service on issues involving tax administration and improvements to tax forms and publications. In 2015, Mr. Butler served as Vice-Chair of the Tax Forms and Publications Project Committee. In 2016, Mr. Butler was awarded the President’s Volunteer Service Award for his contributions to TAP during his three-year term.
Mr. Butler is a frequent speaker to various organizations and businesses on issues involving tax law, business law, and estate planning/probate matters.