IRS to Provide Taxpayers some Relief in Light of the COVID-19 Pandemic

As most everyone knows, individual and C corporation tax returns and payments generally are due April 15 of each year. In light of the economic crisis the country is facing, the government announced that any person or entity (including corporations, trusts, and estates) with a tax return due April 15, 2020 is granted an automatic 90-day extension on filing and payment. This means that 2019 income tax returns and payments that would have been due April 15, 2020, are now due July 15, 2020. Taxpayers will be able to request filing extensions beyond July 15 using normal procedures. The extension also applies to the 2020 first quarter tax deposit that was due April 15, 2020, which now is due July 15, 2020. However, the deadline for the second quarter deposit (June 15, 2020) remains in place.

Taxpayers on Payment Plans may Suspend Payments from April 1st to July 15th 

Payments due under existing Installment Agreements have been suspended between April 1 and July 15, 2020. Taxpayers who are currently unable to make payments under an Installment Payment Agreement, including a Direct Debit Installment Agreement, may suspend payments during this period if needed. Further, the IRS will not default any Installment Agreements during this period. However, note that interest will continue to accrue on any unpaid balances.

Taxpayers with Pending offer in compromise (“OIC”) applications have until July 15th to provide requested additional information/supporting documentation. In addition, the IRS will not close any pending OIC request before July 15, 2020, without the taxpayer's consent.

Taxpayers with existing OIC agreements have the option of suspending all payments on accepted OICs until July 15, 2020, although interest will continue to accrue on any unpaid balances.

The IRS will not default an OIC for those taxpayers who are delinquent in filing their tax return for tax year 2018. However, taxpayers should file any delinquent 2018 return (and their 2019 return) on or before July 15, 2020.

The OIC process is designed to resolve outstanding tax liabilities by providing a "Fresh Start" to people facing a liability exceeding their net worth. To learn more about Offers in Compromise, visit IRS.gov.

In addition to suspending the reporting of new delinquent accounts to private collection agencies, the IRS has also suspended automatic liens and levies actions until July 15th. Further, taxpayers who become "seriously delinquent" will not receive Passport Certifications during this period. Certification prevents taxpayers from receiving or renewing passports.

For questions or further information on tax relief, please reach out to attorney Josh Nesser at jnesser@lavellelaw.com to schedule an appointment.