IRS Taxpayer Relief Initiative: Taxpayers Receive More Flexibility on Tax Payment Arrangements Amid the COVID-19 Pandemic

The IRS has announced a number of changes designed to help struggling taxpayers impacted by COVID-19 more easily settle their tax debts with IRS. The new IRS Taxpayer Relief Initiative makes a few changes to collection procedures during COVID.

Short-term payment plans

nols carrybackThe IRS offers options for short-term and long-term payment plans, including Installment Agreements via the Online Payment Agreement system. It 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.

Installment agreements

Installment Agreement options are available for taxpayers who can’t pay their full balance, but can pay their balance over time. The IRS expanded Installment Agreement options to remove the requirement for financial statements and substantiation in more circumstances for balances owed up to $250,000 if the monthly payment proposal is enough.

Eligible individual taxpayers who owe less than $250,000 only for the 2019 tax year, may qualify to set up an Installment Agreement without a notice of federal tax lien filed by IRS.

Qualified taxpayers with existing Direct Debit Installment Agreements may now be able to use the Online Payment Agreement system to propose lower monthly payment amounts and change their payment due dates.

Temporarily delaying collection

Taxpayers can request a temporary delay of the collection process by contacting the IRS. If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer’s financial condition improves.

Offers in compromise

The IRS is offering additional flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted offer in compromise. Certain taxpayers qualify to settle their tax bill for less than the amount they owe by submitting an Offer in Compromise. Taxpayers should use the Offer in Compromise Pre-Qualifier tool to determine eligibility.

Relief from penalties

The IRS provides reasonable cause assistance to taxpayers for failure to file, pay, and deposit penalties. First-time penalty abatement relief is also available for the first time a taxpayer is subject to one or more of these tax penalties.

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