IRS announces temporary relief for taxpayers within its tax collection and audit functions
[Updated April 3, 2020]
On March 25, 2020, the Internal Revenue Service announced its “People First Initiative” to assist taxpayers impacted by the challenges of COVID-19. See IR-2020-59 (March 25, 2020). Temporary relief is provided for taxpayers who are the subject of IRS collection efforts or who are making payments on an installment agreement or offer in compromise. The IRS also announced that it is generally suspending new audits. The IRS Large Business and International Division supplemented this relief in an internal memorandum to its employees dated March 25, 2020, where a temporary suspension of certain audit enforcement procedures was announced.
These relief provisions are applicable for the three and one-half month period from April 1 to July 15, 2020 (the “Suspension Period”), which coincides with the previously announced July 15 extended deadline for filing and paying certain 2019 income taxes.
Highlights of the announcements include:
- For existing installment agreements or accepted offers in compromise, payments due during the Suspension Period are suspended (however, interest will continue to accrue).
- The IRS will not default any installment agreement during the Suspension Period.
- For pending offers in compromise, taxpayers have until July 15 to provide requested information to support the offer in compromise, and the IRS will not close any pending offer in compromise before July 15 without the taxpayer’s consent.
- The IRS will not default an offer in compromise for non-filing of the taxpayer’s 2018 income tax return, but the taxpayer should file the return (and 2019 return) on or before July 15.
- Liens and levies (including seizure of a personal residence) will be suspended during the Suspension Period; however, the IRS will continue to pursue high-income non-filers and perform other similar activities where warranted.
- During the Suspension Period, the IRS will suspend notifications to the State Department for purposes of suspending or denying passports.
- The IRS will not forward new delinquent accounts to private collection agencies during the Suspension Period.
- The IRS will not start any new audits during the Suspension Period, except where deemed necessary to protect the government’s interests. For existing audits, in-person meetings will be suspended, but the audit will continue remotely where possible.
- The IRS Large Business and International Division has further provided that, where a taxpayer does not comply with an IRS request for information and/or documentation during an audit (an “Information Document Request” or “IDR”), it is generally suspending its enforcement procedures through July 15 for taxpayers adversely affected by COVID-19. IRS audit enforcement action for noncompliance with an IDR would normally include the issuance of a summons to the taxpayer.
- Matters pending before the IRS Office of Appeals will continue to be worked by Appeals employees, and Appeals conferences will be held by telephone or videoconference.
- The IRS will continue to issue Notices of Deficiency where necessary; however, where a statute of limitations for assessment is not set to expire in 2020, the IRS is unlikely to issue a Notice of Deficiency prior to July 15.
The IRS added that more details about the implementation of these provisions will be provided soon.