IRS Announces Taxpayer Relief Initiative to Help People Struggling with Tax Debts
New Tax Relief for People Experiencing COVID-19-Related Financial Difficulties
“At the IRS, we recognize these are challenging times for everyone, and we understand that many Americans still face COVID-related hardships.”
– Darren Guillot (IRS Small Business/Self-Employed Deputy Commissioner for Collection and Operations Support)
The IRS recently announced that several changes will be made to help taxpayers who have been impacted by COVID-19 and are struggling with their tax debts. This is the IRS’ attempt to provide relief for taxpayers who owe money but are having financial difficulties because of the Coronavirus pandemic.
IRS Commissioner Chuck Rettig said, “The IRS understands that many taxpayers face challenges, and we’re working hard to help people facing issues paying their tax bills. Following up on our People First Initiative earlier this year, this next phase of our efforts will help with further taxpayer relief efforts.”
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Taxpayer Relief Initiative
The IRS is expanding taxpayer options for making payments and providing alternatives to resolve balances owed. While there have always been payment plans and other tax debt tools available to taxpayers, the new IRS Taxpayer Relief Initiative is expanding on those existing options even more.
Darren Guillot, who is the IRS Small Business/Self-Employed Deputy Commissioner for Collection and Operations Support, said, “We want people to know our IRS employees are committed to continue helping taxpayers wherever possible, including offering many options for those struggling to pay their tax bills.”
The Taxpayer Relief Initiative includes the following revised procedures:
- Taxpayers who qualify for a short-term payment plan option may now have up to 180 days to resolve their tax liabilities (instead of 120 days).
- The IRS is offering flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted Offer in Compromise (OIC).
- The IRS will automatically add certain new tax balances to existing Installment Agreements for individual and out-of-business taxpayers. This is a more taxpayer-friendly approach that will occur instead of defaulting the agreement, which can complicate matters for those trying to pay their taxes.
- To reduce tax burden, certain qualified individual taxpayers who owe less than $250,000 may set up Installment Agreements without providing a financial statement or substantiation if their monthly payment proposal is sufficient.
- Some individual taxpayers who only owe for the 2019 tax year and who owe less than $250,000 may qualify to set up an Installment Agreement without a notice of federal tax lien filed by the IRS.
- Qualified taxpayers with existing Direct Debit Installment Agreements may now be able to use the Online Payment Agreement system to propose lower monthly payment amounts and change their payment due dates.
The revised COVID-related collection procedures included in the Taxpayer Relief Initiative will be especially helpful for people who have a history of filing and paying their taxes on time.
“If you’re having a tax issue, don’t go silent. Please don’t ignore the notice arriving in your mailbox. These problems don’t get better with time. We understand tax issues and know that dealing with the IRS can be intimidating, but our employees really are here to help,” Guillot said. “While it’s been important for us and the nation to resume our critical tax compliance responsibilities, we continue to assess the wide-ranging impacts of COVID-19 and other difficulties people are experiencing.”
Payment Plans & Installment Agreements
The IRS is offering relief options for short-term and long-term payment plans, which includes Installment Agreements made using the Online Payment Agreement (OPA) system. This service is generally available to individuals who owe $50,000 or less in combined income tax, penalties, and interest – or businesses that owe $25,000 or less in combined income tax, penalties, and interest – that have filed all tax returns. For eligible taxpayers, short-term payment plans can now be extended from 120 to 180 days.
Installment Agreement options are also available for taxpayers who cannot pay their full tax balance but are able to pay it over time. The IRS expanded its Installment Agreement options to remove the requirement for financial statements and substantiation (in most circumstances) for taxpayers who owe up to $250,000 if the monthly payment proposal is considered sufficient. Additionally, the IRS modified its Installment Agreement procedures to further limit requirements for Federal Tax Lien determinations for some taxpayers who only owe for tax year 2019.
Additional Tools to Help Taxpayers Who Owe the IRS
In addition to revised rules for payment plans and Installment Agreements, the IRS offers more tools to assist people who owe taxes:
Temporarily Delaying Collection — You can contact the IRS to request a temporary delay of the collection process. If the IRS determines that you are unable to pay, it may delay collection until the your financial condition improves.
Offer in Compromise — Certain taxpayers may qualify to settle their tax bill with the IRS for less than the full amount they owe by submitting an Offer in Compromise. To help determine your eligibility, use the IRS Offer in Compromise Pre-Qualifier tool. The IRS is currently offering additional flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted offer in compromise due to the COVID-19 pandemic.
Relief from Penalties — The IRS is allowing for reasonable cause assistance for taxpayers with failure to file, pay, and deposit penalties. Additionally, first-time penalty abatement relief is available for the first time a taxpayer is subject to one or more of these tax penalties.
For more information, visit the Tax Debt Relief page.