There were rumors that the IRS was easing up in the collections area due to COVID-19. Now with IR-2020-59 there is confirmation. If you are the type of person who arranges life to live on after-tax income, the release might not be of much interest to you. On the other hand, if you are dealing with IRS Collections, listen up.
If You Are In Collections You Can Relax A Little
If you are on an installment agreement, you don’t have to make any payments that are due between April 1 and July 15. If under the terms of your installment agreement, the ten-year statute will run out without the full tax being paid, this is arguably tantamount to a small forgiveness.
The IRS reminds you that if you can’t pay your balance due you can ask for an installment agreement. Frankly, it is possible that a passive aggressive approach might work better. Wait for them to contact you and then ask for an installment agreement. Execution of that strategy requires steely nerves, careful attention to your mail and making sure you tell IRS when your address changes.
You can suspend payments on accepted Offers In Compromise until July 15. Interest will continue to accrue. Whether that matters or not depends on the terms of the OIC.
More Time To Get Back In Compliance
IRS will not default Offers In Compromise, due to the 2018 return being late (Note: the latest it was due was 10/15/2019.) One of the themes of IRS Collections is to have you be in compliance currently so you don’t get in the same pickle again. So there is a reminder to clean up your act by July 15.
“The new IRS People First Initiative provides immediate relief to help people facing uncertainty over taxes,”
“We are temporarily adjusting our processes to help people and businesses during these uncertain times. We are facing this together, and we want to be part of the solution to improve the lives of all people in our country.”
The Statute Of Limitations
There is a bit of a caveat: “However, the IRS will continue to take steps where necessary to protect all applicable statutes of limitations.” If you are in an audit where the statute is close to expiring they are going to want you to extend. Otherwise, they will pull the trigger on a Notice of Deficiency. The release indicates that they generally will not do that before July 15 if the statute will not expire in 2020.
There is no right answer here, but if I were in that situation, I would probably not extend, but be sure to have somebody lined up to send in the Tax Court petition.
Other Things Not To Worry About
Specific actions that the IRS will not perform in what might be seen as something of a ceasefire include.
Liens and levies (including any seizures of a personal residence) initiated by field revenue officers will be suspended during this period. However, field revenue officers will continue to pursue high-income non-filers and perform other similar activities where warranted.
That kind of stuff is actually pretty rare. What is more common and also suspended are:
New automatic, systemic liens and levies
Generally, there will not be new audits.
Private Collectors
The IRS will not be turning over accounts to private collection from April 1 to July 15. That is actually not good news. The private collectors can’t take the nasty actions that IRS is holding back on. If you are taking the passive-aggressive approach having your account with the private collectors is good news, if you don’t mind hanging up the phone every once in a while.
Reilly’s Fifteenth Law Of Tax Planning – If somebody calls you up to talk about your unpaid federal taxes, just hang up.
Other Coverage
Kelly Erb has also covered this release and provides more detail. I consider my job to be providing the slightly cynical perspective.
Dylan Moroses on Law 360 has IRS To Suspend Some Tax Enforcement In Light Of COVID-19
Allyson Vesprille of Bloomberg Tax had sniffed out what was coming over a week ago with IRS Stopping Some Tax Enforcement Action Amid Virus Spread.