CPE

IRS and COVID-19: Big changes to compliance programs

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On March 25, 2020, the IRS issued an information release (IR 2020-59) that outlines its People First Initiative in response to COVID-19. The new initiative provides relief on a range of issues, but is primarily focused on easing payment guidelines and postponing compliance actions.

According to IRS commissioner Chuck Rettig, "The new IRS People First Initiative provides immediate relief to help people facing uncertainty over taxes…we are temporarily adjusting our processes to help people and businesses during these uncertain times. We are facing this together, and we want to be part of the solution to improve the lives of all people in our country."

The program start date was April 1, 2020, and it will run through July 15, 2020. During this time, the IRS has stated it will try to avoid in-person contacts while continuing to take steps to protect all applicable statutes of limitations.

"IRS employees care about our people and our country, and they have a strong desire to help improve this situation," Rettig said. "These new actions reflect just one of many ways our employees are working hard every day to assist the nation."

Per IR 2020-59, highlights of the key actions in the IRS People First Initiative include:

Existing installment agreements

For taxpayers under an existing installment agreement, payments due between April 1, 2020, and July 15, 2020, are suspended.

New installment agreements

The IRS reminds people unable to fully pay their federal taxes that they can resolve outstanding liabilities by entering into a monthly payment agreement with the IRS.

Offers in compromise (OIC)

The IRS is taking several steps to assist taxpayers in various stages of the OIC process:

  • Pending OIC applications – The IRS will allow taxpayers until July 15, 2020, to provide requested additional information to support a pending OIC.
  • OIC payments – Taxpayers have the option of suspending all payments on accepted OICs until July 15, 2020, although by law interest will continue to accrue on any unpaid balances.
  • Delinquent return filings - The IRS will not default an OIC for those taxpayers who are delinquent in filing their tax return for tax year 2018.
  • New OIC applications – The IRS reminds people facing a liability exceeding their net worth that the OIC process is designed to resolve outstanding tax liabilities by providing a fresh start.
Non-filers

The IRS reminds people, who have not filed returns for tax years prior to 2019, to file their delinquent returns. Once delinquent returns have been filed, taxpayers with a tax liability should consider taking the opportunity to resolve any outstanding liabilities by entering into an installment agreement or an offer in compromise with the IRS to obtain a fresh start.

Field collection activities

Liens and levies (including any seizures of a personal residence) initiated by field revenue officers will be suspended during this period. However, field revenue officers will continue to pursue high-income non-filers and perform other similar activities where warranted.

Automated liens and levies

New automatic, systemic liens and levies will be suspended during this period.

Passport certifications to the State Department

IRS will suspend new certifications to the Department of State for taxpayers who are seriously delinquent during this period.

Private debt collection

New delinquent accounts will not be forwarded by the IRS to private collection agencies to work during this period.

Field, office and correspondence audits

During this period, the IRS will generally not start new field, office, and correspondence examinations. They will continue to work refund claims, where possible, without in-person contact. However, the IRS may start new examinations where deemed necessary to protect the government's interest in preserving the applicable statute of limitations.

  • In-person meetings - In-person meetings regarding current field, office, and correspondence examinations will be suspended. Even though IRS examiners will not hold in-person meetings, they will continue their examinations remotely, where possible.
  • Unique situations - Particularly for some corporate and business taxpayers, the IRS understands that there may be instances where the taxpayers desire to begin an examination while people and records are available and respective staffs have capacity. In those instances, when it is in the best interest of both parties, and appropriate personnel are available, the IRS may initiate activities to move forward with an examination – understanding that COVID-19 developments could later reduce activities for an agreed period.
  • General requests for information - In addition to compliance activities and examinations, the IRS encourages taxpayers to respond to any other IRS correspondence requesting additional information during this time, if possible.  
Earned income tax credit and wage verification reviews

Taxpayers have until July 15, 2020, to respond to the IRS to verify that they qualify for the earned income tax credit or to verify their income.

Independent office of appeals

Appeals employees will continue to work their cases. Although Appeals is not currently holding in-person conferences with taxpayers, conferences may be held over the telephone or by video conference. Taxpayers are encouraged to promptly respond to any outstanding requests for information for all cases in the independent Office of Appeals.

Statute of limitations

The IRS will continue to take steps, where necessary, to protect all applicable statutes of limitations. In instances where statute expirations may be jeopardized during this period, taxpayers are encouraged to cooperate in extending such statutes. Otherwise, the IRS will issue notices of deficiency and pursue other similar actions to protect the interests of the government in preserving such statutes. Where a statutory period is not set to expire during 2020, the IRS is unlikely to pursue the foregoing actions until, at least, July 15, 2020.

Practitioner priority service (PPS)

Practitioners are reminded that, depending on staffing levels and allocations going forward, there may be more significant wait times for the PPS. The IRS will continue to monitor this as situations develop.

Further information about these initiatives can be obtained by going to the IRS website.

The content contained in this article is for information purposes only and not tax advice.  You should consult a tax advisor for advice applicable to your situation.

Tara Fisher has been practicing international tax for 20 years. Her professional background includes working for the US Congress Joint Committee on Taxation, and the national tax practice of PWC, the University of Pittsburgh, and American University in Washington, DC. She is a licensed CPA and holds both an undergraduate and graduate degree in accounting from the University of Virginia.