As part of the IRS People First Initiative, the agency has temporarily suspended sending notice of liens. The IRS announced its People First Initiative on March 25 to aid taxpayers with COVID-19-related financial challenges.
The IRS COVID relief suspends many collection actions. But what Americans need to know is that you should not delay getting up to date with payments to the IRS. Eventually, these collections will still become due, and failing to prepare for that could mean you will face serious financial penalties and hardships.
About the IRS People First Initiative
Recognizing that the coronavirus pandemic posed challenges for people’s personal finances, the IRS took the following measures:
Suspended existing installment agreements: from April through July 15, 2020, taxpayers with an existing installment agreement were permitted to suspend payments. The IRS will not process defaults on Installment Agreements during that time frame. However, interest on the amount owed continued to accrue on unpaid balances for installment agreements between April and July 15.
Allowing for new installment agreements: individuals who are unable to pay their federal taxes can enter into new installment agreements to meet those obligations.
Changes to offers in compromise (OIC): the IRS allowed individuals with pending OIC applications to provide additional information through July 15 and the IRS did not close any requests before July 15 without the taxpayer’s consent. Taxpayers were also allowed to suspend payments on OICs through July 15, though the payments still accrued interest on unpaid balances. The IRS did not default any taxpayers who were delinquent on OICs. Taxpayers were still required to file delinquent returns. Furthermore, the IRS allowed taxpayers to file for a new OIC if their liabilities exceeded their net worth.
Notice of liens: field revenue officers suspended issuing notice of liens and levies as well as seizing assets during this IRS COVID relief period.
Automated liens and levies: the IRS suspended the automatic and systematic liens and levies process.
Passport certifications for delinquent taxpayers: the Department of State will not issue passport certifications to individuals who are seriously delinquent in their tax payments and have not set up an installment agreement or OIC.
Private debt collection: the IRS did not send any delinquent accounts to private collection agencies during the relief period.
How to Resolve Tax Issues Since the IRS COVID Relief Period Ended
From tax debt to IRS audits, it’s best to work with a team of experts when facing tax issues. Receiving a dreaded tax notice of an audit can be a terrible feeling. However, professional tax advice can help you navigate this challenging time.
You have options when it comes to resolving tax issues. These include the following:
Full payment: pay the taxes you owe in full upon receiving notice of improper tax payment. This helps you avoid any confrontation with the IRS. Just be aware that sometimes the tax bills that are included in notices like these might not be accurate and reflect the highest possible deductions and optimizations to limit your payments. That’s where discussing the matter with a tax professional can help.
Work with a tax advisor to pay only the necessary tax amount: tax advisors are skilled at asking the right questions and minimizing your taxes legally. By working with a tax advisor, you can file your taxes accurately with appropriate deductions and write-offs to pay only the necessary tax amount.
Installment agreement: you can resolve your tax issues by entering into an installment agreement with the IRS for the taxes you owe. Working with a tax advisor, you can reach a fair monthly installment amount. The IRS might recommend high monthly payments that place an economic hardship on you.
Offer in compromise: when your tax problems are more than or equal to your reasonable collection potential (RCP), the tax entity can enter into an offer in compromise with you to pay what is possible and reasonable.
Help from Tax Consultants
Levy & Associates is a team of attorneys, CPAs, and former IRS agents who help individuals dealing with tax debts and IRS audits. We’ll help analyze your finances to ensure you only pay the minimum taxes required to help you get back to financial stability.
We understand that stable finances play an important role in your emotional and physical wellbeing. Let us help you get back on track and work through notices from the IRS and state tax departments. Contact us for assistance with your tax needs.