IRS announces help with tax debt

By Sally P. Schreiber, J.D.

The IRS on Monday announced a new program, the Taxpayer Relief Initiative, to help taxpayers who are unable to pay their taxes because of the pandemic (IR-2020-248). Taxpayers who owe taxes and could not pay have always had options such as installment agreements and offers in compromise, but now they have more options.

The highlights of the Taxpayer Relief Initiative, according to the IRS:

  • Taxpayers who qualify for a short-term payment plan option may now have up to 180 days to resolve their tax liabilities instead of the usual 120 days.
  • The IRS says it will offer more flexibility for taxpayers who are temporarily unable to meet the payment terms of an accepted offer in compromise.
  • The IRS will automatically add certain new tax balances to existing installment agreements for individuals and for business taxpayers who have gone out of business. This will occur instead of having taxpayers default on their agreements.
  • 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 owe only 2019 taxes and owe less than $250,000 may qualify to set up an installment agreement without having 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.
  • Taxpayers who cannot pay can contact the IRS to request a temporary halt in collection efforts, which the IRS will grant if the taxpayer is currently unable to pay.

Reasonable cause and first-time abatement

The IRS initiative is also highlighting reasonable-cause relief from penalties for taxpayers with failure-to-file, failure-to-pay, and failure-to-deposit penalties. First-time abatement penalty relief is also available to taxpayers the first time they are subject to the penalty.

The AICPA requested an expedited process for installment agreements and recommended delays in IRS collection activities in a letter sent to David J. Kautter, Treasury's assistant secretary for tax policy, and IRS Commissioner Charles Rettig in July.

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the pandemic, visit the JofA’s coronavirus resources page.

For tax-related resources, visit the AICPA’s COVID-19: Tax resources page.

Sally P. Schreiber, J.D., (Sally.Schreiber@aicpa-cima.com) is a JofA senior editor.

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