IRS Expands Tax Debt Relief Options to Help Taxpayers (Corona Virus Edition)
The Coronavirus pandemic has impacted virtually all facets of society and the global economy. The federal government has taken steps to provide aid to individuals and small business owners through multiple pieces of legislation, including the CARES Act of 2020 and the American Rescue Plan of 2021. Following suit, the Internal Revenue Service announced various modifications and new programs aimed at assisting taxpayers who have been negatively impacted by the COVID-19 pandemic. Many of these expanded programs and modifications instituted by the IRS are aimed at helping taxpayers more easily obtain tax debt relief.
In response to the pandemic, the IRS is now allowing taxpayers who qualify for a short-term payment plan option to take up to 180 days to resolve a tax debt issue. This timeframe has been lengthened from the standard 120 days.
Another modification is that the IRS is offering greater flexibility for certain taxpayers who are temporarily unable to meet the payment terms of an accepted Offer in Compromise.
The IRS will automatically add certain new tax balances to existing Installment Agreements, for individual and out of business taxpayers. This taxpayer-friendly approach will occur instead of defaulting the agreement, which can complicate matters for those trying to pay their taxes.
Another relief protocol established by the IRS is allowing certain taxpayers who owe less than $250,000 in tax debt to more easily set up an installment agreement without providing a financial statement or substantiation, as along as their monthly payment proposal is sufficient to pay down the balance owed in a reasonable amount of time.
In addition, if you are a taxpayer with an existing Direct Debit Installment Agreement with the IRS, you may be eligible to use the Online Payment Agreement (OPA) system that allows taxpayers to proactively propose lower monthly payment amounts and request modification of tax payment due dates. In general, this service is available to individuals who owe $50,000 or less in combined income tax, penalties and interest or businesses that owe $25,000 or less combined that have filed all tax returns. The short-term payment plans are now able to be extended from 120 to 180 days for certain taxpayers.
Additional Taxpayer Relief Initiatives
In addition to above-described payment plans and broadened installment agreements, the IRS is now offering more tools to help taxpayers who owe federal taxes. They include:
- Temporary Delay in Collection Efforts — Taxpayers can contact the IRS to proactively request a temporary delay of collecting any unpaid tax debts. If the IRS determines you are unable to pay, the agency may delay collection until your financial condition improves.
- Expanded Offer in Compromise — Taxpayers may be eligible to settle a tax debt for less than the amount owed by filing an Offer in Compromise with the IRS. There is also greater flexibility for certain taxpayers who are temporarily unable to service the payment terms of an already-accepted offer in compromise.
- Greater Tax Debt Relief through Reduced or Eliminated Penalties — The IRS has taken steps to limit the instances where a taxpayer would be assessed a tax debt penalty by expanding reasonable cause assistance. In addition, there is first-time penalty abatement relief also available for a taxpayer who is notified of a tax penalty for the first time.
Have Questions? Speak to an Experienced Tax Attorney Today
Whether you are encountering issues with tax debt from your business, or individually, Anderson Bradshaw is here to help. Our law firm is comprised of skilled and experienced tax professionals and consultants that can help you through your unique tax situation, including ways to secure tax debt relief. With over three decades of experience in the industry, we have seen many different tax issues and have learned the best ways to handle them based on our clients’ unique situation. Call us today at 877-550-3911 to schedule a free 30-minute Tax Consultation or fill out this form to receive a complimentary Tax Evaluation.