Additional IRS Guidance on Coronavirus Tax Relief: New People First Initiative

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Jason B. Freeman

Jason B. Freeman

Managing Member

214.984.3410
jason@freemanlaw.com

Mr. Freeman is the founding member of Freeman Law, PLLC. He is a dual-credentialed attorney-CPA, author, law professor, and trial attorney.

Mr. Freeman has been named by Chambers & Partners as among the leading tax and litigation attorneys in the United States and to U.S. News and World Report’s Best Lawyers in America list. He is a former recipient of the American Bar Association’s “On the Rise – Top 40 Young Lawyers” in America award. Mr. Freeman was named the “Leading Tax Controversy Litigation Attorney of the Year” for the State of Texas for 2019 and 2020 by AI.

Mr. Freeman has been recognized multiple times by D Magazine, a D Magazine Partner service, as one of the Best Lawyers in Dallas, and as a Super Lawyer by Super Lawyers, a Thomson Reuters service. He has previously been recognized by Super Lawyers as a Top 100 Up-And-Coming Attorney in Texas.

Mr. Freeman currently serves as the chairman of the Texas Society of CPAs (TXCPA). He is a former chairman of the Dallas Society of CPAs (TXCPA-Dallas). Mr. Freeman also served multiple terms as the President of the North Texas chapter of the American Academy of Attorney-CPAs. He has been previously recognized as the Young CPA of the Year in the State of Texas (an award given to only one CPA in the state of Texas under 40).

The IRS has been busy issuing guidance regarding the coronavirus and its effects on the federal income tax system.  In addition, the IRS has specifically recognized the detrimental effects the coronavirus (COVID-19) outbreak has had on taxpayers.  On March 25, 2020, the IRS announced a “sweeping series of steps to assist taxpayers by providing relief on a variety of issues ranging from easing payment guidelines to postponing compliance actions.”  The IRS has labeled this new initiative the People First Initiative, and a quick summary of some of its details follow.

Existing Installment Agreements and Offers-in-Compromise

Generally, taxpayers can avoid levies by submitting collection alternatives, such as an installment agreement or offer-in-compromise (“OIC”).  As part of its People First Initiative, the IRS is urging those with unpaid tax debts to come forward and take advantage of these collection alternatives.

For those who have already come forward, the IRS has indicated that it will relax its collection standards.  Specifically, if a taxpayer has entered into an existing installment agreement, the IRS has agreed to suspend any payments that are due within April 1, 2020, through July 15, 2020.  In addition, the IRS has agreed not to default any existing installment agreements during this period.

Further, the IRS has indicated that it will provide assistance to taxpayers with pending or existing OICs.  For those taxpayers with pending OIC applications (i.e., those under review), the IRS has granted such taxpayers additional time to provide any requested information to support the pending OIC.  Moreover, the IRS has agreed not to close any pending OIC before July 15, 2020, without the taxpayer’s consent.

In the event the taxpayer has already entered into an OIC, the taxpayer can elect to suspend any payments due until July 15, 2020.

Non-Filers

As part of the People First Initiative, the IRS is reminding taxpayers who have not filed that all may not be so bad. Specifically, the IRS’ records are reflecting that at least one million households have not filed prior year returns and are due refunds.  But the IRS is cautioning taxpayers to act quickly to claim their refunds because the applicable statute of limitations to make such a claim might be near.

For taxpayers who have not filed returns but owe taxes, the IRS is recommending that such taxpayers file their delinquent returns and take advantage of collection alternatives, such as an installment agreement or OIC.  Although not mentioned in the New People First Initiative, taxpayers should be cautious of any potential criminal issues in filing late returns, and may want to consider taking advantage of the IRS’ voluntary disclosure program.

Collection Activities

The IRS collects tax debts through Revenue Officers and its automated collection services.  Generally, these collection efforts will be suspended until July 15, 2020.

Passport Certifications to the State Department

The IRS is suspending its certifications to the U.S. Department of State for taxpayers who are “seriously delinquent” until July 15, 2020.

IRS Audits

The IRS has indicated that it will “generally” not start new audits until July 15, 2020.  However, the IRS has warned that it may initiate a new audit if it concludes that it must to protect the government’s interest, such as if the statute of limitations for assessment is about to run.

Final Thoughts

The People First Initiative provides taxpayers with a welcome breather to focus on what is important right now—family and their own health.  For taxpayers who are not in compliance with their tax obligations, it also provides an opportunity for them to come forward and resolve their tax obligations.

Because any agreement with the IRS via an installment agreement or OIC depends largely on the taxpayer’s financial circumstances, taxpayers who have been severely affected by the COVID-19 outbreak should strongly consider submitting a request for an installment agreement or an OIC now to obtain a more favorable agreement with the IRS.  Those taxpayers who have taken advantage of the People First Initiative may well thank themselves later when things eventually turn the corner.

 

Business Tax Planning Lawyer

Need assistance in managing the business planning processes? Freeman Law advises clients with corporate and other entity formations and reorganizations. Restructuring entities—through conversions, mergers, and liquidations—can involve particularly complex tax and regulatory considerations. Freeman Law provides experienced tax and business counsel, helping our clients achieve their organizational goals in a tax-efficient manner. Schedule a consultation or call (214) 984-3000 to discuss your corporate structuring or business and tax planning concerns.