2020 was a year unlike any other as the nation dealt with many troubling issues, including the COVID-19 pandemic. The novel coronavirus forced many to lose their jobs and homes over the course of the last year.
As a result of the COVID-19 pandemic, taxpayers have been wondering if there is any relief in sight . There are millions of taxpayers that owe the Internal Revenue Service (IRS) each year and managing debt is becoming a bigger problem.
Fortunately, the IRS recently announced several new changes that are designed to help struggling families. The recent changes are proposed to assist individuals seeking IRS debt relief.
IRS Debt Relief – 2020 Tax Changes
The Internal Revenue Service has considered the growing financial difficulties among U.S. citizens in the aftermath of the COVID-19 pandemic. As a result, the government agency recently announced changes to assist those seeking IRS debt relief.
The IRS assessed its collection activities and introduced new changes that are eligible for 2020 returns. These changes are designed to assist taxpayers that owe the IRS money yet are struggling financially because of the pandemic.
IRS Commissioner Chuck Rettig confirmed the changes recently in November 2020 . The new changes plan to expand taxpayer options for making payments as well as expand on current alternatives for debt relief. Rettig explained the changes support the People First Initiative which prevented relief from certain collection actions and processes.
IRS Taxpayer Relief Initiative
The new IRS Taxpayer Relief Initiative is part of the announced reform for 2020. The program expands on previous IRS debt relief initiatives and is designed to assist taxpayers that have a stellar track record in terms of filing returns and paying taxes on time.
The IRS Taxpayer Relief Initiative offers many incentives, including:
- Taxpayers that qualify for a short-term payment plan now have up to 180 days to resolve tax liabilities (it was previously 120 days).
- Forgiveness for taxpayers that are temporarily unable to meet the payment terms of an Offer in Compromise.
- Avoiding defaulting taxpayer agreements with the IRS, and instead adding taxpayer-friendly fees to accounts which are not nearly as damaging.
- Expanding the IRS Installment Agreement program to enable qualified individuals that owe less than $250,000.
Furthermore, the IRS Taxpayer Relief Initiative protects high earners that owe less than $250,000 (for the 2019 tax year only) and wish to establish a payment plan. The new changes allow taxpayers to do so without the need for a federal tax lien.
Lastly, qualified taxpayers with an existing payment plan to the IRS can now utilize the Online Payment Agreement system to negotiate lower monthly payment amounts or change due dates without penalty.
Expanding IRS Payment Plan Options
Among the big changes that are part of the IRS Taxpayer Relief Initiative is the ability to pursue short-term or long-term payment plans. These include Installment Agreements with the IRS through the online payment system.
The system is designed to only provide loans for individuals that owe $50,000 or less in combined income tax, penalties, and interest or for a business that owes less than $25,000 in combined taxes and penalties.
The payment plan develops a method for paying back taxes in an orderly fashion over a considerable amount of time. For example, the IRS installment agreement works like a monthly payment obligation to another type of creditor such as for student loans or credit cards.
Installment Agreements are usually the best option for taxpayers that cannot pay off the balance in full but can reasonably do so over a considerable amount of time with a low-interest IRS loan. However, if you owe a substantial amount you may also want to consider pursuing an Offer in Compromise which requests that the IRS forgive all or a portion of the debt.
Additionally, under the changes for 2020, taxpayers may also want to consider other IRS debt relief options like requesting Temporary Delaying Collection or Relief from Penalties.
Get Out of Tax Debt ASAP
The IRS recommends that taxpayers do not delay in addressing tax debt. You can take advantage of these changes and more by contacting the IRS by phone or in writing. Furthermore, you may want to consider hiring professional help if the debt has become unmanageable.
Levy & Associates is available to meet with you for a free consultation . Contact our office at 800-TAX-LEVY or click here!