US coronavirus relief programme offers non-compliant taxpayers a way back

Thursday, 26 March 2020
The US Internal Revenue Service (IRS) has launched a new aid programme for taxpayers affected by the coronavirus epidemic, offering extensive relief from tax collection and a postponement of its most important compliance actions.

The ‘People First’ initiative suspends all IRS lien and levy activity until 15 July, and places a moratorium on launching any new examinations, except where the statute of limitations is set to expire some time this year.
According to US tax expert Cory Stigile, the suspension of these powers offers a unique opportunity for non-filing or late-filing taxpayers to get into compliance.

The benefits of People First are particularly valuable because lien and levy activity are two of the IRS’s primary enforcement tools to collect taxes. Suspending them allows taxpayers to file their overdue returns together with an instalment request or some other collection alternative, which has a completely different dynamic of suspended enforced collection.

Second, says Stigile, a significant part of the US’ recent economic stimulus measures have been administered through the IRS. So the filing of a 2019 return, or previous returns, may result in a tax refund, or at least an offset due to the relief provisions.

Moreover, taxpayers who are struggling to meet previously agreed instalment obligations can now suspend payments until 15 July without being put into default, although interest will continue to accrue on unpaid balances. Those with pending offers in compromise (OICs) now have until 15 July to negotiate them without the IRS closing them without taxpayer consent, and OIC payments on accepted offers can be suspended until the same date. Finally, the announcement provides that the IRS will not cancel offers for taxpayers who are late with their 2018 return filings, provided their 2018 and 2019 returns are filed before 15 July.

The programme, however, does not suspend the IRS’ ability to withhold passport certifications for non-compliant taxpayers, thereby preventing them from obtaining a US passport or renewing an expiring one. The IRS intends to deploy this power to encourage ‘delinquent taxpayers’ to submit a request for an instalment agreement or, if applicable, an offer in compromise during this period.

Newly delinquent accounts will not be forwarded by the IRS to private collection agencies to work during the period to 15 July. But the IRS warned that its field revenue officers will ‘continue to pursue high-income non-filers and perform other similar activities where warranted’.


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