Do you owe back taxes to the IRS? Are you working to resolve your matter with an IRS payment plan or settlement? Are you facing IRS collection actions such as garnishments and levies? Are you one of the many people who are facing financial hardship due to the current COVID-19 pandemic? If so, you may be wondering if the IRS will give you a break during this time of national crisis and staggering unemployment figures.
The IRS has given relief to many taxpayers during this time. It has halted new levies, allowed people who are on payment plans to stop making monthly payments, and has extended key deadlines. Here is a summary of some of their key pronouncements.
Levies and Garnishments
The IRS has announced that from April 1 through July 15, 2020, IRS collection officers will not file any new liens against taxpayers’ property and will not issue new levies to seize funds from taxpayers’ bank accounts or to garnish their wages. An exception to this is that they will continue to pursue high-income taxpayers who have not filed their tax returns. The Internal Revenue Service will also put a stop to new automated liens or levies during this time. The IRS is calling this its People First Initiative.
However, if a lien has already been filed, or a levy or garnishment is already in place, it will not be automatically released. The IRS will release a levy only if it is causing an economic hardship such that the taxpayer cannot pay his or her basic living expenses. These releases are part of its continuing mission critical functions. The hardship release requests will be evaluated on a case by case basis. If you are facing an IRS levy, contact our office to find out how we can help you during this time.
Installment Agreements
If you are currently on a payment plan with the IRS and it is causing you a financial hardship, you are not required to continue to make payments. The IRS has announced that due to COVID-19, and as part of its People First Initiative it will not default installment agreements for lack of payment from April 1 to July 15, 2020.
If you cannot get through to the IRS by phone to stop your payments, you may need to contact your bank to stop payment or remove the funds from your bank account on the day of the scheduled debit.
IRS Settlements (Offers-In-Compromise)
An Offer-In-Compromise is an agreement with the Internal Revenue Service to give people a “Fresh Start” if their tax liabilities exceed their net worth. If an Offer-In-Compromise is accepted by the IRS, the taxpayer can pay less than the full amount owed, and the rest is forgiven. The IRS has announced if a taxpayer’s offer has been accepted, and they are paying their offer amount with monthly payments, they do not need to make any additional payments until July 15, 2020. The IRS has also reminded people that it will be accepting new Offers-In-Compromise to give people a “Fresh Start” if their tax liabilities exceed their net worth.
Estimated Tax Payment Due Dates
If you are a small business owner, you should be familiar with the requirement to make quarterly estimated tax payments throughout the year so that you do not end up with a large tax liability at tax time that you are unable to pay. The IRS has also suspended the obligation to make individual and corporate quarterly estimated tax payments. If you have an estimated tax payment due on or after April 1, 2020, and before July 15, 2020, you can wait until July 15, 2020 to make that payment without penalty. IRS Extends Tax Deadlines.
Refund Claim Due Date
Taxpayers generally have three years from the due date of a tax return to claim a refund for that year. After that date, the refund will be forfeited. For 2016 tax returns, the normal April 15, 2020 deadline to claim a refund has been extended to July 15, 2020. If you do want to claim a refund for your 2016 taxes, make sure you properly address and mail the tax return and ensure that it is postmarked by the July 15, 2020 date.
Need Help?
If you have any questions or need assistance to make sure that you are properly taking advantage of these programs, feel free to contact us. We are here to help. Schedule your free 15-minute consultation today.
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