The IRS Has Created A Plan To Help You With Your Tax Debts During Covid-19 Pandemic Times

The IRS Has Created A Plan To Help You With Your Tax Debts During Covid-19 Pandemic Times

The IRS is committed to helping taxpayers when it can, especially if they struggle to pay their tax bills. The IRS announced several changes to help taxpayers impacted by COVID-19 settle their tax debts. ‘A Closer Look’ added new relief measures following up on the “Our People First” initiative earlier this year.

The new IRS Taxpayer Relief Initiative adds to the existing options that already include payment plans and tools available to taxpayers. The new COVID-related collection procedures will make it easier for taxpayers who always file their returns and pay their taxes on time.

Short-term payment plan

If you qualify for the short-term payment plan, you will now have 180-days instead of only 120-days to resolve your tax liabilities. IRS offers flexibility for taxpayers who are temporarily unable to meet the payment terms of an accepted Offer in Compromise. The IRS will add certain new tax balances to existing Installment Agreements for individuals and out of business taxpayers. This will occur instead of defaulting the agreement, which can complicate matters for those trying to pay their taxes.

  • Certain qualified individual taxpayers with a debt of less than $250,000 will be allowed to set up Installment Agreements without providing a financial statement or substantiation if their monthly payment proposal is sufficient.
  • Taxpayers who owe for 2019 only and less than $250,000 may qualify for an Installment Agreement without an IRS notice of federal lien.
  • Qualified taxpayers with Direct Debit Installment Agreements are now free to use the Online Payment Agreement System to propose lower monthly payments and change their payment dates.

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How to plan for IRS tax relief

Long-term payment plan

The IRS offers both short-term and long-term payment plans, including Installment Agreements via the Online Payment Agreement (OPA) System. It is available to individuals who owe $50,000 or less in combined income tax, penalties, and interest or for businesses that owe $25,000 or less combined but did file all their tax returns.

These short-term payment plans can now be extended from 120-days to 180-days for some taxpayers.

  • Installment Agreements are for taxpayers who cannot fully pay their balance but can pay it off over time.
  • The IRS removed the financial statements and substantiation requirements in more situations for balances outstanding up to $250,000 if the monthly proposal is sufficient.
  • The IRS modified Installment Agreementprocedures to limit requirements for federal tax lien determinations for some taxpayers who owe taxes only for 2019.

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Additional Tools

  • Temporary Delay of Collections: Taxpayers can ask the IRS to delay the collection process for some time. If the IRS determines that the taxpayer cannot pay, it may delay collection until the taxpayer’s financial condition improves.
  • Offer in Compromise: Some taxpayers will qualify to settle their tax bills for less than the amount they owe if they submit an Offer in Compromise. To determine eligibility, use the Offer in Compromise Pre-Qualifier tool. The IRS offers more flexibility for taxpayers who cannot meet the payment terms of an accepted offer in compromise for the time being.
  • Penalty Relief: The IRS offers reasonable cause assistance who failed to file, pay, and deposit penalties. First time penalty abatement relief is now available for the first time taxpayer.

All taxpayers can access important information on IRS.gov. Taxpayers who request payment plans, including Installment Agreements, might apply through IRS.gov without talking to a representative.

To request relief, taxpayers must be responsive when they receive a due balance notice. Relief, including the new relief, can be requested by contacting the number on the taxpayer’s notice or responding in writing.

Never go silent when you’re dealing with the IRS. Time is not your friend. Respond to IRS notices immediately.

Readers should note that this article is only intended to convey general information on these issues and that FAS CPA & Consultants (FAS) in no way intends for the contents of this article to be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. This article cannot serve as a substitute for such professional services or advice. Any decision or action that may affect the reader’s business should not rely solely on the contents of this article, but should rather be consulted on with a qualified professional adviser. FAS shall not be responsible for any loss sustained by any person who relies on this presentation. This article is subject to change at any time and for any reason.

If you are currently dealing with IRS debt, be sure to contact us and discuss which debt resolution option would be most beneficial for your present situation and future goals and opportunities.

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Fulton Abraham Sánchez, CPA I am Certified Public Accountant, specialized in Tax Planning & Offshore Strategies for Real Estate, Hedge/Equity Funds, Fintech, Crypto, Expats, IRS Debt Resolution. You can email me fa@fascpaconsultants.com and follow us on Facebook : FAS CPA & Consultants.

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