An Interesting Turn Of Events Could Mean The IRS Owes You Interest
If you were one of the taxpayers who filed your tax return early, before COVID-19 became the crisis it continues to be, and you were owed a tax refund and have not yet received it, the IRS could be indebted to you. That’s right.
According to Forbes.com, “While it doesn’t happen often, if the IRS doesn’t issue your refund within 45 days of accepting your return, it owes you interest.” https://www.forbes.com/sites/jimwang/2020/06/26/irs-to-pay-interest-on-your-late-tax-refund/#c874aa427519
Not only that, this is one year when procrastination just might pay. Here’s why. The IRS is actually going to pay interest on refunds due if you file by July 15th. So they are paying the interest as if they were late in making the refund! Talk about a quirky turn of events! That’s one I’ve never seen.
Meanwhile One Group Is Fighting On Behalf Of Taxpayers For Extended Relief
If there is any one group with insight into how the pandemic is affecting taxpayers, it’s The American Institute of CPAs (AICPA). As a result of this insight, the AICPA is asking the IRS to continue its tax and penalty relief as COVID-19 continues to spread.
According to a very recent article in AccountingToday.com, “In a letter, the AICPA urged the IRS to “act immediately to automatically waive failure to file and failure to pay penalties to the millions of taxpayers affected and working through the challenges created by the coronavirus.””
The article quotes AICPA vice president of taxation Edward Karl, who states, “We are asking the IRS to do their part to help businesses and individual taxpayers by waiving penalties and delaying collections as the country begins the process of re-opening and operating in only a limited capacity.” https://www.accountingtoday.com/news/irs-to-end-people-first-initiative-despite-coronavirus-and-start-collecting-overdue-tax-payments-as-aicpa-urges-continued-relief?position=editorial_5&campaignname=ACT%20Best%20of%20the%20Week-07112020&utm_source=newsletter&utm_medium=email&utm_campaign=ACT_Weekly_Best+of+the+Week%2B%27-%27%2B07112020&bt_ee=MUE%2BKV6gEVvM%2BaayozuVzTqByLxy6AF5UCyG9GyF%2BtFCRhTwcbPZitcwvYjw5ETs&bt_ts=1594472451154
The institute didn’t just ask for extended relief, they also offered a set of well thought out recommendations. It remains to be seen if the IRS is going to take them into consideration, but we can all hope they do because it is certain that many people and businesses are not going to be able to pay their taxes. Millions of people are not working, and many businesses are unable to function.
I’m posting the recommendations the AICPA made to the IRS so you can at least get an idea of the kind of relief they are seeking that will be helpful to millions of individuals and businesses.
Penalty relief: Currently, taxpayers who fail to file a return or fail to pay an amount shown as tax on the return on or before its due date are subject to a penalty. The AICPA recommends the IRS automatically waive penalties for the 2019 tax year through the extended filing deadline for all taxpayers. In addition, the AICPA is asking that the IRS reassess the impact of the coronavirus during 2021 and determine the appropriateness of offering similar penalty relief for the 2020 tax year.
Installment agreements: Currently, taxpayers who can’t pay the full amount of tax due in one payment may enter into an agreement with the IRS to pay any tax due in installments. The AICPA recommends the IRS establish an expedited process to approve new installment agreements or modifications of existing installment agreements based on realistic and affordable payment arrangements for taxpayers impacted by the coronavirus.
Delay in IRS collections: Currently, if taxpayers don’t pay their tax obligation in full at the time it is due, they generally will receive a series of escalating automated notices reminding them of the amount owed, including any penalties and interest accrued, and demanding payment. These notices precede the automated collection process, which continues until the account is satisfied, the case is transferred to a revenue officer or until the IRS is no longer able to legally collect the tax.The AICPA recommends that the IRS continue to halt its automatic collections activities of liens and levies for at least an additional 90 days after July 15. At that time, the AICPA suggested, the IRS should reassess the appropriateness of re-establishing any collection activities. https://www.accountingtoday.com/news/irs-to-end-people-first-initiative-despite-coronavirus-and-start-collecting-overdue-tax-payments-as-aicpa-urges-continued-relief?position=editorial_5&campaignname=ACT%20Best%20of%20the%20Week-07112020&utm_source=newsletter&utm_medium=email&utm_campaign=ACT_Weekly_Best+of+the+Week%2B%27-%27%2B07112020&bt_ee=MUE%2BKV6gEVvM%2BaayozuVzTqByLxy6AF5UCyG9GyF%2BtFCRhTwcbPZitcwvYjw5ETs&bt_ts=1594472451154
We Can Hope
As soon as I hear whether these recommendations have been accepted by the IRS, I’ll let you know. In the meantime, please stay well and stay safe. This will eventually pass.