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IRS Tax Relief - IRS Problems Affected by the Pandemic

Updated: Sep 21


Coast to Coast - IRS Help

Tax Debt help - IRS Tax Relief

The Internal Revenue Service has announced a number of changes aimed to help struggling taxpayers impacted by COVID-19 resolve outstanding tax debts. If you currently owe a tax debt to the IRS and have been financially impacted by the pandemic, the agency has expanded the tax relief options available for making payments and provided alternatives to resolve unpaid tax liabilities. These revised COVID-19-related tax relief programs are helpful to taxpayers interested in resolving and settling their unpaid taxes by way of an installment agreement as well as taxpayers who had entered into an Offer in Compromise and are now unable to continue remitting payments pursuant to a pre-COVID-19 agreement. Installment Agreements

An IRS Installment Agreement will permit qualified taxpayers with unpaid tax liabilities to repay the amount owed via monthly payments over a period of time. In order to qualify for an installment agreement, a taxpayer must have (1) filed all required tax returns and (2) be up to date on the current year’s tax obligations. Our tax professionals always counsel our readers to consult with an experienced tax professional before agreeing any payment plan with the IRS. You may be better served being placed into Currently not Collectible status or settling the entire tax debt with an Offer in Compromise.

One of the COVID-19-related provisions is the expansion of the streamlined installment agreement―termed “streamlined” due to the fact that a financial statement disclosure to the IRS is not required. The limit of outstanding tax liability that would qualify a taxpayer for a streamlined installment agreement was $50,000. The IRS has now expanded the limit to $250,000 of “assessed liability”―not the total liability due the IRS. This expanded limit on liability should allow more taxpayers to qualify and request an installment agreement. Further, some individual taxpayers who have unpaid tax liabilities only for tax year 2019, in an amount less than $250,000, may qualify for an installment agreement without the IRS filing a notice of federal tax lien.

In an effort to assist those taxpayers who have already entered into an installment agreement for earlier years, the IRS will automatically add certain new tax balances (incurred since the effective date of the existing installment agreement) to the existing installment agreements for individuals and out-of-business taxpayers. This negates the need for the IRS to consider the old agreement in default and request the taxpayer to provide additional financial information for a new agreement. Additionally, taxpayers with an existing direct debit installment agreement may now be able to utilize the online payment agreement system to propose a lower monthly payment amount and/or change their payment due dates. Further, for those taxpayers that qualify for a short-term installment plan, they now have up to 180 days to pay the liability in full instead of the previous 120-day period. Offers in Compromise

The in Offer in Compromise (OIC) program permits qualified taxpayers with outstanding tax liabilities to negotiate a complete settlement for an amount that is dramatically less than the tax owed.

The IRS has not suddenly developed "a heart." These changes in their approach to enforcement is entirely self serving. Due to the COVID lockdowns and high unemployment, the IRS realizes that they will be facing an unprecedented amount of taxpayers with unpaid tax debt. The volume of IRS debtors will be overwhelming. The agency is about to be buried in unpaid tax debt. The IRS will be under pressure to close files.

If you owe more than $10,000 to the IRS, you really should be looking to settle with the IRS for "pennies on the dollar." For the above written reasons, our team feels that there may never be a better time to settle with the IRS. The IRS typically reviews the taxpayer’s income, expenses, assets and liabilities in great detail to make a determination regarding the taxpayer’s ability to pay.

In an effort to assist taxpayers who are impacted by COVID-19, the IRS is offering flexibility for some taxpayers who are temporarily unable to meet the payment terms of a previously accepted OIC. Previously, the OIC would be considered null and void if required payments were missed. The taxpayer, in conjunction with their representative, should reach out to the IRS to discuss payment options. Taxpayers should never attempt negotiation with the IRS without professional representation. The best advice we can provide to you is this: if you find yourself facing an IRS collection matter is to get into compliance as quickly and strategically as possible. Don't commence negotiations with the IRS or any taxing authority directly. Always seek professional guidance. The IRS will encourage any taxpayer to "GO IT Alone." It makes their life easier.


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