The global COVID-19 pandemic has presented significant challenges for American citizens. From both a health standpoint and a financial perspective. Individuals are looking for ways to reduce the financial impact of layoffs experienced since the shutdown of the economy. In an effort to relieve some of this burden, the IRS introduced the People First Initiative on March 25, 2020.
What is the People First Initiative and what provisions does it include?
The initiative outlines provisions for suspension of certain tax payments and reduction or suspension of IRS representative enforcement actions. The initiative is effective beetween April 1, 2020 – July 15th, 2020 and covers a number of IRS processes.
People First Initiative – Provision 1:
Installment Agreements
An installment agreement is a payment plan set up with the Internal Revenue Service. This allows you to pay your outstanding taxes over time.
For taxpayers who currently have an installment agreement with the IRS, payments will be suspended on their accounts between April 1 – July 15th, 2020. Installment agreements are not considered to be in default during this time.
NOTE: Interest will continue to accrue during this time. All missed payments will be due once the extension period has expired.
People First Initiative – Provision 2:
Offer in Compromise
An offer in compromise is an agreement with the IRS that allows taxpayers experiencing financial hardship to settle their tax debts for less than the total amount owed. Depending on where a taxpayer is in the offer in compromise application process, there are several remedies available.
If you currently have an offer in compromise agreement, you may opt to suspend payments owed between April 1, 2020- July 15th, 2020. Like installment agreements, the interest will continue to accrue. Any payments missed during the relief period will become due at the end of the extension timeframe.
If your application for an offer in compromise is pending, you have until July 15th in order to provide additional requested information. The initiative also provides that applications for an offer in compromise may not be closed without the taxpayer’s permission during the covered period.
If you have delinquent tax filings in 2018, these late filings will not result in a defaulted offer in compromise agreement if the outstanding tax returns are filed prior to July 15th, 2020.
People First Initiative – Provision 3:
Automated and Field Collection Activities
Collection activities including liens and levies will be halted during the initiative period in most cases. However, Internal Revenue Service representatives will continue to pursue actions related to high-income taxpayers.
People First Initiative – Provision 4:
IRS Passport Certifications
The IRS will suspend the submission of passport certifications to the State Department for seriously delinquent taxpayers. These certifications seek to prevent taxpayers with severely outstanding tax liabilities from renewing or receiving a new passport.
People First Initiative – Provision 5:
IRS Collection Activity
During the People First Initiative coverage period, the IRS will cease forwarding taxpayer accounts to third party collection agencies.
People First Initiative – Provision 6:
IRS Audits
The IRS is modifying its policies related to conducting audits in light of the current coronavirus pandemic. Where possible, IRS agents will conduct their audits remotely. In-person meetings are suspended at this time. Taxpayers are encouraged to respond to outstanding requests.
Some taxpayers may have received requests to verify their income information. This is in order to confirm their qualification for the Earned Income credit. These individuals have until July 15th, 2020 to respond to this request.
While these People First Initiative provisions have been made to help taxpayers, the statute of limitations on the IRS will still apply.
The IRS will take action to protect its interests should the expiration of the statute occur during this time.
The People First Initiative can offer much needed tax relief during an unprecedented time in our country. However, it’s important to check the details and how they may apply to your circumstances.
We can help you with understanding your current options.
The July 15th deadline is quickly approaching, but it isn’t too late to take action.
If you would like to learn more about the People First Initiative, give us a call. Please feel free to contact us for more information or to schedule an appointment.