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March 27 2020

Client Alert: IRS’ People First Initiative in Response to COVID-19

By: Daniel J. Parmeter, Jr.

On March 25, 2020, the IRS announced that it is initiating several steps to assist taxpayers by providing relief on a variety of issues ranging from easing payment guidelines to postponing compliance action.  While the IRS will be releasing more specifics about the implementation of the initiative in the coming days, the People First Initiative includes:

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

Offers in Compromise.  Taxpayers are given until July 15, 2020 to provide requested additional information to support a pending Offer in Compromise, and the IRS will not close any pending Offer in Compromise request before July 15, 2020 without the taxpayer’s consent.  Taxpayers have the option of suspending all payments on accepted Offers in Compromise until July 15, 2020, although interest will continue to accrue on any unpaid balances.  The IRS will not default an Offer in Compromise for those taxpayers who are delinquent in filing their tax returns 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 IRS field revenue officers will be suspended until July 15, 2020.  However, the officers will continue to pursue high-income non-filers and perform other similar activities.

Automatic Liens and Levies.  New automatic, systemic liens and levies initiated by the IRS will be suspended until July 15, 2020.

Passport Certifications to the State Department.  The IRS is suspending new certifications to the Department of State for taxpayers who are seriously delinquent until July 15, 2020.  The IRS encourages these taxpayers to submit a request for an Installment Agreement or, if applicable, an Offer in Compromise.  Certification prevents taxpayers from receiving or renewing passports.

Field, Office and Correspondence Audits.  The IRS will generally not start new field, office and correspondence examinations until July 15, 2020.  The IRS will continue to work refund claims where possible without in-person contact.  The IRS may start new examinations where it deems necessary to avoid statute of limitations issues.  In-person meetings for current field, office and correspondence examinations will be suspended; however, the IRS will continue to work remotely, where possible, and taxpayers are encouraged to respond to any requests for information they have already received (or may receive) on all examination activity during this period if they are able to do so.

Earned Income Tax Credit and Wage Verification Reviews.  Taxpayers will have 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.  These taxpayers should exercise their best efforts to obtain and submit all requested information, and if unable to do so, to reach out to the IRS indicating the reason such information is not available.  Until July 15, 2020, the IRS will not deny these credits for a failure to provide requested information.

Independent Office of Appeals.  IRS appeals employees will continue to work their cases; however, they will not be holding any in-person meetings.  Meetings may be held over the telephone or by videoconference.

Statute of Limitations.  The IRS will continue to take steps where necessary to protect all statute of limitation issues.  In instances where statute expirations may be jeopardized during this period, the IRS encourages the taxpayers to cooperate in extending such statutes.  Otherwise the IRS will issue Notices of Deficiency and pursue other similar actions to protect the government’s interests.  Where a statutory period is not set to expire during 2020, the IRS states that it is unlikely to pursue the foregoing actions until at least July 15, 2020.