The Internal Revenue Service (IRS) has ad some changes to its collection processes to help taxpayers who have been affected by COVID-19. Specifically, the IRS says it is expanding taxpayers’ options for making payments and alternatives for resolving owed balances.
“The IRS understands that many taxpayers face challenges and we are working hard to help those with problems pay their tax bills,” said IRS Commissioner Chuck Rettig. “Following our People First Initiative earlier this year, this next phase of our efforts will contribute to further taxpayer relief efforts. “
“We want people to know that our IRS employees are committed to continuing to help taxpayers where possible, including providing many options for those who are struggling to pay their tax bills,” said Darren Guillot, IRS deputy commissioner for collection and operations for small businesses and the self-employed. Support.
The IRS’s new taxpayer relief initiative makes some changes to collection procedures during COVID.
Payment plan extensions
Currently, the IRS offers short and long term payment plans, including installment agreements that you can apply for. online. Online applications are generally available for individuals who owe $ 50,000 or less in combined income tax, penalties and interest or for businesses that owe $ 25,000 or less combined who have filed all tax returns (if you exceed these amounts, you can still make a deal but you will need to speak to someone on the phone). Short-term payment plans are free – it’s not free to set it up – but typically need to be paid in full within 120 days. As part of the IRS’s new taxpayer relief initiative, this deadline will be extended to 180 days for some taxpayers.
Less documentation for staggered agreements
Setting up installment agreements can take a lot of paperwork. Now the IRS says some qualified individual taxpayers who owe less than $ 250,000 can set them up without providing a financial statement or justification if their monthly payment proposal is sufficient.
No tax lien notice is required for certain installment agreements
Procedure is usually important when it comes to IRS and installment agreements. For now, some taxpayers who only due for tax year 2019 and who owe less than $ 250,000 may qualify to set up an installment agreement without a federal tax lien notice filed by the IRS.
Tax obligations added automatically
The IRS will also automatically add certain new tax balances to existing installment agreements, for individuals and non-business taxpayers. I know it’s not ring like a good thing, but it is. You can put your installment agreement at risk if you don’t pay your taxes, including new balances. It can be difficult to keep track when you can barely keep your head above water, so by adding the new balances into the mix, the IRS says this “taxpayer-friendly approach” will help some taxpayers avoid the tax. default of payment.
Online opportunities to make changes
Once you have an existing installment agreement, you usually need to speak to the IRS to make changes. Now, qualifying taxpayers with installment agreements paid by direct debit may now be able to make changes online, including offering lower monthly payments and changing their payment due dates.
More flexibility for offers in compromise
An offer in compromise allows you to settle your tax debt for less than the total amount you owe. The IRS considers a host of circumstances, including the ability to pay; Income; expenses; and equity. Typically, the IRS will only accept an Order in Council if it determines that it will not be able to collect the amount owed within a reasonable time. This option shouldn’t be your first choice (and please don’t believe those TV commercials that swear you’ll be able to pay your tax bill for pennies on the dollar).
While you can apply for an executive order on your own, consider a tax professional. If, however, you decide to try it yourself, use the IRS Online Prequalification Tool to see if you qualify and to calculate a preliminary offer amount.
For taxpayers with existing OCIs who are temporarily unable to meet payment terms, the IRS says it “will provide additional flexibility.”
Temporary delays in collection
The IRS may be able to temporarily delay collections – but you must ask. This usually happens when your account is marked as “currently unrecoverable”. But be careful: being currently uncollectible doesn’t mean the debt is gone, it means the IRS has determined that you can’t afford to pay the debt right now. You can find out more here.
Relief from Sanctions for Reasonable Cause
If you have reasonable cause for not filing, paying, and filing on time, you may be eligible for a reduction in the penalty. These reasons include natural disasters, inability to obtain records or death, serious illness, unavoidable incapacity or absence affecting you or your immediate family. Not having enough money is usually not enough – on its own – to qualify. You can find out learn more about penalty relief here.
First time reduction in penalty reductions is also available to taxpayers.
Taxpayers can learn more by visiting the IRS website at IRS.gov.
“If you are having a tax problem, don’t be silent. Please don’t ignore the notice that arrives in your mailbox,” Guillot said. “These problems don’t improve over time. We understand tax issues and know that dealing with the IRS can be intimidating, but our people are really here to help.”