Due to the COVID-19 crisis, the IRS has put a temporary halt on issuing tax liens, wage garnishments and bank levies absent unusual and extreme circumstances. You may still receive computer generated collection notices but be assured that there has been a moratorium on IRS collection activity until July 15, 2020. This date may be extended depending on the circumstances. The IRS is still open in seeking to resolve past liability through Offer in Compromises, Installment Agreements or Hardship Status also known as Currently Not-collectible (CNC).
The IRS COVID-19 Pause: Take Action While the Collection Clock is Stopped
Along with a postponement of 2020’s tax filing deadline, the IRS is showing uncharacteristic patience for taxpayers in a variety of past-due and collections situations. Note that this does not include penalties and interest accumulation on accounts. The pause is part of the general government slowdown as workers avoid COVID-19 exposure, but it’s also in recognition of the difficulties that taxpayers are facing even in meeting their daily expenses during this time. It’s an opportunity for you to see if there’s any way to resolve your tax situation and get current.
A Chance to Catch a Breath for Seriously Delinquent Taxpayers
During the first months of the COVID-19 crisis, the IRS has taken a break, called the “People First Initiative”, until at least July 15, 2020. It puts a temporary halt on collection activities like issuing tax liens, making bank levies, and filing wage garnishments, except in unusual and extreme circumstances. For average taxpayers who have gotten behind, it’s a chance to stop worrying for a while. But it’s time to act.
A Chance to Act So Your Situation Improves
This is a great time to look at your tax situation and consider seeking a resolution of your past liability using the IRS’s Offer in Compromise, Installment Agreement, or Hardship Status methods of addressing your tax problems. Hardship Status is also known as Currently Non-Collectible (CNC). It is the IRS’s way of recognizing that, in your current situation, collection efforts aren’t likely to be productive.
The Offer in Compromise Makes Sense in a Lot of Cases
The Offer In Compromise is an especially attractive option for many people. The OIC is basically a deal that gets your tax settled for less than what you owe. It helps to deal with a mountain of debt that’s kept your situation with the IRS stuck, and turns it into a reasonable plan. Wiztax calculates and displays your “offer amount” for free (just create your free account to get started). This is the amount you will offer to the IRS to settle your tax debt – often for significantly less than what you owe.
When the IRS COVID-19 Pause Ends, Collection Resumes as Before
At some point, soon after the pause ends, the IRS will have to crank up their collections system. They will start reaching out to taxpayers in an effort to get them to bring their accounts current. Now is a great opportunity to get to work seeing if you qualify for one of their programs.
Letters May Arrive
The computers at the IRS may still print and send collection notices, but the people who authorize collection actions at the IRS have put them on hold until mid-July or later, which like many other COVID-19 related postponements may change as the situation unfolds.
Summarizing the IRS People First Initiative
Some other specific benefits of the COVID-19 pause which the IRS is calling its “People First Initiative. Note that any delays typically don’t stop the interest and penalties clock:”
- Payment plan payments due up to July 15, 2020 can be delayed to that date without default.
- You can establish a new installment agreement to make monthly payments on your tax debt.
- You can update any existing OIC application with new information from your financial situation.
- If your OIC is accepted, you can wait to pay until July 15, 2020.
- If your OIC is dependent on keeping current with your 2018 and 2019 returns, you have a little more time.
- Refunds from 2016 and later can be claimed by filing a late return until the pause is over.
- Passports, both new and renewed, won’t be affected by IRS reporting to the State Department during this time.
- Private collectors — the IRS is ceasing to refer new delinquent accounts to private collectors during this period.
In addition to pausing most collections actions, automated or by Revenue Officer, on all but a few special taxpayers such as those with high incomes, the IRS encourages taxpayers who already are affected by liens and levies to reach out to their IRS contact if the levy in combination with COVID-19 financial hardship is a situation that needs addressing.
Give us a call to find out more and get going! We’re ready to help you get the tax part of your life in order. Call us at 866-568-4593 or Start Now by creating a free account.
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