SUSPENDED INSTALLMENT PAYMENTS TO THE IRS ARE BEING REVIEWED AND UPDATED

If your clients have installment agreements with the  IRS be aware that IRS is updating  their criteria   on which it provides answers to taxpayers with existing installment agreements. The suspension through July 15, 2020 of due dates under those agreements is being reviewed. Care should be taken in reviewing these agreements so that your clients are complying.

Code Sec. 6159(a) allows IRS to enter into written agreements with delinquent taxpayers under which such taxpayers may pay their taxes in installments (installment agreements).

The IRS initiated the  “People First Initiative” in the form of  IR 2020-59. This pronouncement  allowed taxpayers with an installment agreement, including a direct debit installment agreement, to suspend any installment payments due between April 1, 2020 and July 15, 2020 (“suspension period”).

https://www.irs.gov/newsroom/irs-unveils-new-people-first-initiative-covid-19-effort-temporarily-adjusts-suspends-key-compliance-program

It was clear that the IRS updated their internal directives on defaulted installment agreements. The suspension effected any taxpayers that did not default on any installment agreements for nonpayment between April 1, 2020 and July 15, 2020.

However, by law, interest continued to accrue on any unpaid balances. (IR 2020-59).

It would be productive to review the Frequently Asked Questions (FAQ) about suspended installment payments that were in place as of April 1, 2020.

In June, IRS provided answers to frequently asked questions (FAQs) about the suspended due dates, under the People First Initiative, for installment agreement payments.

https://www.irs.gov/newsroom/installment-agreement-direct-debit-frequently-asked-questions

 IRS has updated their website which included the following reminders:

Reminder regarding interest and penalties while installment agreement is in effect. Though interest and late-payment penalties continue to accrue on any unpaid taxes, the failure-to-pay-tax penalty rate is cut in half while an installment agreement is in effect. The usual penalty rate of 0.5% per month is reduced to 0.25%.

Where taxpayer is unable to meet his current installment agreement terms. If a taxpayer cannot meet their current installment agreement terms due to a COVID related hardship, they can revise the agreement on IRS.gov/payment plan or call the customer service number on their IRS notice if they have a Direct Debit Installment Agreement.

https://www.irs.gov/payments

IRS monthly payment vouchers. IRS did not mail monthly reminder payment vouchers during the suspension period due to IRS office closures caused by COVID-19. IRS will resume mailing reminder notices as IRS offices re-open.

Taxpayers must resume making payments with their first payment due on or after July 16, 2020 to avoid default, even if they do not receive their monthly reminder notice.

What are your options if you still owe the IRS for old tax debts? Here are the answers from “The People First Initiative” that I hope will HELP.

As we approach the end of the 2019 filing season on July 15, 2020  the prospect of owing additional monies to the IRS is not a happy thought.

Even worse many taxpayers find themselves adding this new debt to their already previous years tax liabilities. Yikesssssssssssss!

As part of the IRS…” People First Initiative” the service recently posted some new information as to collection issues. This posting goes through some common frequently asked questions ( FAQ) that I think would be helpful to review.

Here is the link to the IRS website…

https://www.irs.gov/newsroom/people-first-initiative-faqs-balance-due-and-payment-options

Background—What is the People First Initiative. On March 25, 2020, the IRS announced its People First Initiative and, as part of this initiative, suspended certain compliance and examination activities due to the COVID-19 outbreak. (IR 2020-59, see IRS suspends certain compliance programs due to COVID-19 (03/26/2020)

https://www.irs.gov/newsroom/irs-unveils-new-people-first-initiative-covid-19-effort-temporarily-adjusts-suspends-key-compliance-program

Background—Injured Spouse relief. A married individual who files a joint return may be an “injured spouse” if, among other things, the IRS applies all or part of a non-liable spouse’s portion of a joint overpayment to the liable spouse’s legally enforceable past-due tax debt, child support or federal non-tax debt, such as a student loan. When a joint overpayment is offset for delinquent child support, both joint filers receive a Notice of Offset from the Bureau of Fiscal Service (BFS). (Instruction, Form 8379, Injured Spouse Allocation)

https://www.irs.gov/forms-pubs/about-form-8379

Background—CARES Act. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act, PL 116-136) provided for the payment of an economic impact payment (EIP) to eligible individuals.

FAQs address balances due and payment options.

As part of its People First Initiative, the IRS has posted on its  website answers to FAQs on tax balances due and payment options.

Q1. Will the IRS forgive taxpayers’ tax debts?

A1. No. The IRS will not forgive taxpayers’ tax debts and balances will continue to accrue penalties and interest during the relief period (April 1, 2020 to July 15, 2020).

However, the People First Initiative does include relief on a variety of issues ranging from easing payment guidelines to postponing compliance actions.

https://www.irs.gov/newsroom/the-what-ifs-for-struggling-taxpayers

Q2. If I owe tax, or have a payment agreement with the IRS, or I owe other federal or state debts, will my EIP be reduced as an offset?

A2. Generally, EIPs will not be offset for federal or state debts. However, EIPs may be offset by past-due child support. The BFS will send you a notice if a child-support offset occurs.

If you are married filing jointly and you filed an injured spouse claim (Form 8379) with your 2019 tax return (or your 2018 tax return if you haven’t yet filed for 2019), half the total EIP will be sent to each spouse and only the liable spouse’s EIP will be offset for past-due child support. There is no need to file another injured spouse claim for the EIP.

The FAQs note that the IRS is aware that, in some cases, injured spouses’ EIPs have been offset by the non-injured spouse’s past-due child support.

The IRS is working with the BFS and the U.S. Department of Health and Human Services, Office of Child Support Enforcement, to resolve this issue as soon as possible. If you filed an injured spouse claim with your 2019 return (or 2018 return if you have not yet filed for 2019) and are impacted by this issue, you do not need to take any action. You (the injured spouse) will receive your unpaid half of the total EIP when the issue is resolved.

https://fiscal.treasury.gov/top/faqs-for-the-public-covid-19.html

Q3. Where can I find current information online about what I owe?

A3. Most individual taxpayers can view their tax account information, including information about current balances, payment history, and information about their current tax year return, using the IRS’s secure online portal.

Taxpayers can also use the IRS’s secure online portal to select electronic payment options and request their tax transcripts.

https://www.irs.gov/payments/view-your-tax-account

Recommendation. If you owe the IRS additional monies contact them immediately. Explain your situation and ask to set up an installment payment. This will avoid a lot of needless stress in your life.

Here is the IRS link to setting up a payment plan. Good Luck !https://www.irs.gov/payments/payment-plans-installment-agreements

Taxpayers should file by July 15 tax deadline but automatic extensions to Oct. 15 are available

IRS will not postpone July 15 deadline

If you were hoping for an additional deadline…think again.

Cancel that summer road trip and get those extensions DONE!

If you missed it please be aware that  IRS announced late on Monday ( 6/29/20) that it will not further postpone federal tax filing and payment deadlines beyond July 15 (IR-2020-134).

In response to the hardships caused by the COVID-19 pandemic, most tax deadlines between April 1 and July 15 were moved to July 15 in Notice 2020-23.

https://www.irs.gov/newsroom/taxpayers-should-file-by-july-15-tax-deadline-automatic-extension-to-oct-15-available

The IRS reminded taxpayers in its announcement that they can apply for an automatic extension of time to file until Oct. 15 but must pay their taxes due by the July 15 deadline.

https://www.irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return

Treasury Secretary Steven Mnuchin said the decision not to further postpone the deadlines came after consultation with various stakeholders.