IRS People First Initiative Temporarily Adjusts Tax Compliance Programs

The Internal Revenue Service announced The People First Initiative (IRS Notice 2020-59) which seeks to provide relief on a variety of issues ranging from easing payment guidelines to postponing compliance actions as a response to financial hardships caused by COVID-19.

The temporary changes include postponing certain payments related to Installment Agreements and Offers in Compromise, collection activity and limiting certain enforcement actions.  The IRS temporarily modified its procedures beginning April 1 and the effort will initially run through July 15. During this period, to the maximum extent possible, the IRS will avoid in-person contacts.

Highlights of the key actions in the IRS People First Initiative include:

Existing Installment Agreements

For taxpayers under an existing Installment Agreement, payments due between April 1 and July 15, 2020 are suspended.  Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Debit Installment Agreement, may suspend payments during this period if they prefer.  Furthermore, the IRS will not default any Installment Agreements during this period.  By law, interest will continue to accrue on any unpaid balances.

Offers in Compromise (OIC)

The IRS is taking several steps to assist taxpayers in various stages of the OIC process:

Pending OIC Applications

The IRS will allow taxpayers until July 15 to provide requested additional information to support a pending OIC.  In addition, the IRS will not close any pending OIC request before July 15, 2020, without the taxpayer’s consent.

OIC Payments

Taxpayers have the option of suspending all payments on accepted OICs until July 15, 2020, although by law interest will continue to accrue on any unpaid balances.

Delinquent Return Filings

The IRS will not default an OIC for those taxpayers who are delinquent in filing their tax return for tax year 2018.  However, taxpayers should file any delinquent 2018 return (and their 2019 return) on or before July 15, 2020.

Field Collection Activities

Liens and levies (including any seizures of a personal residence) initiated by field revenue officers will be suspended during this period.  However, field revenue officers will continue to pursue high-income non-filers and perform other similar activities where warranted.

Automated Liens and Levies

New automatic, systemic liens and levies will be suspended during this period.

Field, Office and Correspondence Audits

During this period, the IRS will generally not start new field, office and correspondence examinations.  It will continue to work refund claims where possible, without in-person contact.  However, the IRS may start new examinations where deemed necessary to protect the government’s interest in preserving the applicable statute of limitations.

If you have questions regarding the IRS’ new People First Initiative, please contact Terry Zabel or another member of the Rhoades McKee Tax Law Team.