After Passage of Stimulus Bill, IRS Grants Additional Tax Relief
By Michael D’Addio, Principal, Tax Services
In addition to the passage of the Coronavirus Aid, Relief and Economic Security (CARES) Act on Friday, the Internal Revenue Service and Treasury have also released guidance providing additional relief. The following relief provisions relate to recognition by the Service that with everything happening in the world, tax-related issues may not be the most relevant.
2020 Gift Tax Returns
In Notice 2020-20, the Service expanded relief previously provided (under Notice 2020-18) and extended the time to file Form 709 (United States Gift and Generation-Skipping Transfer Tax Return), normally due on April 15, 2020, to July 15, 2020. In addition, the date for payment of any gift taxes related to these filings is also deferred, without penalty or interest, to July 15.
This relief is automatic, and there is no requirement to file Form 8892, an extension form for Form 709, to obtain the benefit of this filing and payment postponement. Form 8892 can be filed by July 15, 2020, to obtain an additional extension of time to file until October 15, 2020. However, any unpaid taxes due will be subject to interest and penalty after July 15, 2020.
This release provides details of the IRS People First Initiative extending certain compliance deadlines and providing the easing of rules relating to installment plan payments, Offers in Compromise, and limiting certain enforcement actions through July 15, 2020. Despite these actions, IRS states that it will remain cognizant of protecting the government’s rights under all applicable statutes of limitations.
Existing Installment Agreements
Payments due between April 1 and July 15, 2020, are suspended and can be deferred at the taxpayer’s preference. The IRS will not default any installment agreement during this period for failure to pay, though interest will continue to accrue on unpaid balances.
New Installment Agreements
IRS reminds taxpayers that those unable to fulfill their outstanding federal tax liabilities should consider entering a payment agreement with IRS.
Offers In Compromise (OIC)
- Pending OICs: Taxpayers will have until July 15, 2020, to provide requested information. Additionally, the IRS will not close a pending OIC before July 15, 2020, without taxpayer consent.
- OIC Payments: Taxpayers will have the option of deferring payments until July 15, 2020. Interest will continue to accrue on unpaid balances.
- Delinquent Return Filings: IRS will not default an OIC for taxpayers who are delinquent in filing a 2018 tax year return. However, this return should be filed by July 15, 2020.
Those who have not filed a return and who have a liability due should file and consider taking advantage of entering into an installment agreement, Offer in Compromise, or using the IRS Fresh Start program.
Automated Liens and Levies
The automated system for liens and levies is suspended.
Private Debt Collection
New delinquent accounts will not be forwarded by IRS to private collection agencies during this period.
Field, Office and Correspondence Audits
The IRS will suspend the start of new field, office and correspondence examinations, except where necessary to protect the IRS under the statute of limitations.
- In-Person Meeting: These are generally suspended. IRS will continue the examination remotely, where possible. Taxpayers should respond to open requests for information that have already been received.
- Unique Situations: Taxpayers may wish to begin an examination while people and information are available or where respective staffs have capacity. Where it is in the best interest of both parties and appropriate personnel are available, the IRS may proceed with the exam taking into account COVID-19 limitations.
- Taxpayers should respond to any other IRS correspondence requesting additional information if possible.
Earned Income Tax Credit and Wage Verification Reviews
Taxpayers will have until July 15, 2020, to respond to requests for information. IRS will not deny the credits for a failure to provide the information until July 15, 2020.
Independent Appeals Office
Appeals employees will continue to work their cases, though not current, holding in-person conferences. However, conferences can be held over the telephone or by videoconference.
Coronavirus Resource Center
Have more questions about the impact of the coronavirus on your business? Visit Marcum’s Coronavirus Resource Center for up-to-date information.