COVID Continuation Inspires IRS To Expand Tax Resolution Options

Earlier this year, in fact right before tax season, when COVID-19 caused the entire country to shut down, the IRS knew right away that many taxpayers were going to have trouble meeting their tax obligations. They enacted the People First Initiative to help taxpayers. Among other things, the tax filing deadline was moved to July 15th. Now, nearly one year later, COVID-19 is still at play. Many people are in worse situations than they were before. Thousands of businesses have had to shut their doors permanently. Millions of taxpayers have been unemployed since the beginning of this pandemic. Many who were once furloughed and hopeful they would be able to return to their jobs are now officially unemployed, adding to the swelling population of people living without an income.

A Single Stimulus Payment Didn’t Go Far

While providing momentary relief, the one stimulus payment that was issued certainly could not sustain anyone who is unemployed, with or without a family, for long. Mortgages and rents cannot be paid. In far too many cases, families are finding it impossible to put food on the table.  And as of this writing, there hasn’t been another stimulus package approved to help.

In addition to the devastation caused by COVID-19, in our neck of the woods there are many who have lost their homes and belongings to the three hurricanes that decided to add to our collective trauma this year. So, I hope it comes as a bit of heartening good news to find out that the IRS is “committed to continue helping taxpayers wherever possible, including offering many options for those struggling to pay their tax bills.” https://www.irs.gov/about-irs/irs-offers-new-relief-options-to-help-taxpayers-affected-by-covid-19

The IRS Steps Up With More Helpful Programs

In these historic and challenging times, millions of people are struggling and suffering. The IRS is stepping up their relief programs, but you still must file your tax returns. The most important message the IRS has is the following: “If you have reasonable cause for failing to file, pay and deposit on time, you may qualify for penalty relief. Those reasons include natural disasters, inability to obtain records, death, serious illness, incapacitation or unavoidable absence affecting you or your immediate family. Not having enough money is generally not enough – on its own – to qualify.” However, and this is an important however, “the reasons for the lack of funds may meet reasonable cause criteria for abatement of the failure-to-pay penalty.”

Overview Of New IRS Taxpayer Relief Initiative

The following is an overview of how the new IRS Taxpayer Relief Initiatives are helping people as the entire country struggles from the economic shutdown due to COVID-19. You can find more details here: https://www.irs.gov/about-irs/irs-offers-new-relief-options-to-help-taxpayers-affected-by-covid-19

  1. The IRS is highlighting reasonable cause assistance available through IRS procedures for failure to file, failure to pay and failure to deposit penalties. First time abatement relief is also available for the first time a taxpayer is subject to one or more of these tax penalties.
     
  2. For individual taxpayers receiving notices (letters about a tax bill) with tax liabilities up to $250,000 for Tax Year 2019 only, the IRS can offer one Installment Agreement opportunity with no lien filed.
     
  3. The IRS is extending the short-term payment plan timeframe to 180 days (normally 120 days).
     
  4. The IRS is easing paperwork requirements to allow individuals more flexibility to get non-streamlined Installment Agreements up to $250,000 without financial verification if their case is not yet assigned to a revenue officer.
     
  5. The IRS is extending guidance on automatically accruing new tax year balances into existing Installment Agreements. (Individuals and Out of Business entities only)
     
  6. The IRS will provide relief for taxpayers having difficulty meeting the terms of previously accepted offers.
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