Today, in the wake of the recent decision by the Internal Revenue Service (“IRS”) to extend the income tax filing and payment deadlines to July 15, 2020, it announced a new taxpayer-friendly program called the “People First Initiative” (the “PFI”). The PFI is designed to provide taxpayers with additional relief from the havoc wreaked by COVID-19.
IRS Commissioner Chuck Rettig stated that the PFI is part of the Service’s “extraordinary steps to help the people of our country.” It is a temporary initiative. Unless extended, the PFI will be available to taxpayers from April 1, 2020 to July 15, 2020 (“Program Period”).
The temporary relief offered by the PFI includes postponing Installment Agreement and Offer in Compromise payments, and halting many collection and enforcement actions. During the Program Period, the IRS will provide needed guidance.
Existing Installment Agreements
During the Program Period:
- Payments under existing Installment Agreements due during the Program Period are suspended.
- Taxpayers who currently cannot comply with the terms of an Installment Payment Agreement, including a Direct Deposit Installment Agreement, are permitted to suspend payments during the Program Period.
- The IRS will not hold any taxpayer in default of any Installment Agreements during the Program Period. NOTE: Interest continues to accrue on unpaid balances during the Program Period.
Offers in Compromise (“OIC”)
Under the PFI, with respect to OICs:
- Taxpayers will have until July 15, 2020 to provide requested additional information to support a pending OIC.
- The IRS will not close pending OIC requests before July 15, 2020.
- Taxpayers may suspend all payments on OICs until July 15, 2020, but interest will continue to accrue.
- The IRS will not hold a taxpayer in default of an OIC because the taxpayer has not filed a 2018 income tax return.
Liens and Levies
During the Program Period, in terms of collection activities, the IRS is making significant changes relative to liens and levies:
- Liens and levies initiated by field revenue officers will be suspended during this period.
- New automatic, systemic liens and levies will be suspended during this period.
Additional Collection and Enforcement Changes
During the Program Period, in terms of additional collection and enforcement activities, the IRS is making significant changes:
- The IRS is suspending new passport certifications to the Department of State.
- The IRS will not forward new delinquent accounts to private collection agencies.
The IRS will generally not commence new field, office and correspondence examinations during the Program Period. It will, however, continue to work existing refund claims without in-person contact. However, it may commence new examinations to protect the government’s interest if there is a statute of limitations concern. During the Program Period:
- In-person meetings will be suspended, but IRS examiners will continue examinations remotely, where possible.
- Where taxpayers want an examination to begin during this period (e.g., while staff and records are available), the IRS may move forward with an examination.
Earned Income Tax Credit and Wage Verification Reviews
The IRS is allowing taxpayers until July 15, 2020 to respond to the IRS to verify that they qualify for the Earned Income Tax Credit or to verify their income. During this period, the IRS will not deny these credits for failure to provide requested information.
During the Program Period, Appeals employees will continue to work cases. Conferences may be held by telephone or videoconference.
Statute of Limitations
During the Program Period, the IRS will take the following actions regarding statutes of limitations:
- It will continue to take steps to protect statutes of limitations, including issuing Notices of Deficiency, where necessary.
- It encourages taxpayers to cooperate to extend statutes of limitations.
- It will likely not pursue actions until at least July 15, 2020 if the statutory period will not expire during 2020.
Practitioner Priority Service (“PPS”)
The PPS phone line apparently will remain open, but there may be more significant wait times.
The PFI is good news for taxpayers. Commissioner Rettig should be commended for his efforts. While the PFI may be temporary, it will provide significant help for many taxpayers in need.
Larry is Chair of the Foster Garvey Tax & Benefits practice group. His practice focuses on assisting public and private companies, partnerships, and high-net-worth individuals with tax planning and advice, tax controversy, and ...
Peter’s practice focuses on tax and business transactions. His tax practice includes tax planning and tax controversy. His business practice includes entity formation, corporate compliance and governance, contract drafting ...
Larry J. Brant
Larry J. Brant is a Shareholder and the Chair of the Tax & Benefits practice group at Foster Garvey, a law firm based out of the Pacific Northwest, with offices in Seattle, Washington; Portland, Oregon; Washington, D.C.; New York, New York, Spokane, Washington; and Beijing, China. Mr. Brant practices in the Portland office. His practice focuses on tax, tax controversy and transactions. Mr. Brant is a past Chair of the Oregon State Bar Taxation Section. He was the long-term Chair of the Oregon Tax Institute, and is currently a member of the Board of Directors of the Portland Tax Forum. Mr. Brant has served as an adjunct professor, teaching corporate taxation, at Northwestern School of Law, Lewis and Clark College. He is an Expert Contributor to Thomson Reuters Checkpoint Catalyst. Mr. Brant is a Fellow in the American College of Tax Counsel. He publishes articles on numerous income tax issues, including Taxation of S Corporations, Reasonable Compensation, Circular 230, Worker Classification, IRC § 1031 Exchanges, Choice of Entity, Entity Tax Classification, and State and Local Taxation. Mr. Brant is a frequent lecturer at local, regional and national tax and business conferences for CPAs and attorneys. He was the 2015 Recipient of the Oregon State Bar Tax Section Award of Merit.
Upcoming Speaking Engagements
- "Entity Classification – The Check-The-Box Regulations Revisited," New York University 81st Institute on Federal TaxationNew York, NY, 10.23.22-10.28.22
- "The Intersection of Code Section 1031 and Opportunity Zones," 2022 OSCPA Northwest Federal Tax Conference10.24.22
- "Entity Classification – The Check-The-Box Regulations Revisited," New York University 81st Institute on Federal TaxationSan Diego, CA, 11.13.22-11.18.22