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  • dave rosa

IRS Offers A New Fresh Start Program for Those Affected by the Pandemic

Updated: Oct 11


Coast to Coast - IRS Help

IRS Tax Relief - Fresh Start Program

The Internal Revenue Service (IRS) has announced they are relaxing their enforcement tactics as struggling taxpayers impacted by COVID-19 resolve outstanding tax debts. Taxpayers currently owing a tax liability and have been financially impacted by the pandemic, the IRS has expanded resolution options. These revised COVID-19-related tax relief programs are helpful to taxpayers interested in resolving their unpaid taxes. These tax relief options include installment agreements 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 (IRS Payment Plans) An IRS Installment Agreement permits a qualified taxpayers with outstanding and 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 (previous 6 years)and (2) be up to date on the current year’s tax obligations.

One of the COVID-19-related provisions implemented by the IRS is the expansion of the streamlined installment agreement due to the fact that a financial statement disclosure to the IRS will not be 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 the “assessed 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 to the existing payment arrangement 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. Furthermore, for those taxpayers that qualify for a short-term installment plan, the taxpayer will now have up to 180 days to pay the liability in full instead of the previous 120-day period. Offer in Compromise (IRS Settlement)

As you may be aware, the Offer in Compromise (OIC) program permits qualified taxpayers with outstanding tax liabilities to negotiate a full settlement for an amount that is far less than the tax owed. An OIC settlement agreement generally will not be accepted by the IRS if they believe that the outstanding liability can be paid through a lump sum or other type of payment arrangement. 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. Prior to these new IRS actions, an Offer in Compromise 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 IRS isn't offering these new tax relief options because "they've gone soft." Logic tells us that with so many taxpayers losing their jobs and being locked out of their businesses, the number of people with tax liabilities will be "going through the roof." Not only will the IRS have to manage the enforcement of the usual yearly tax debt, but due to COVID, that tax debt will double and even tripled. The IRS has only so many resources to enforce collection. This means the agency will ramp up notices and use private collection agencies even more. It also means that the IRS will have greater pressure to close files.

Our tax professionals are of the opinion that the IRS will be forced to approve more than their present 42% OIC approval rate. The shear volume of tax debtors could very well overwhelm the IRS. As written previously that's our opinion which we base on our experience. YOU MAY NEVER HAVE A BETTER OPPORTUNITY TO SETTLE A TAX DEBT. THE TIME TO ACT IS NOW. THE TAX PROFESSIONALS AT FLAT FEE TAX RELIEF HAVE 96% OFFER IN COMPROMISE SUCCESS RATE OVER THE PAST DECADE.






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