IRS to Temporarily Adjust Operations and Key Compliance Functions

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The Internal Revenue Service announced a new initiative to provide taxpayer relief through a variety of measures, including easing payment guidelines and postponing compliance actions in light of the Coronavirus (COVID-19) pandemic. The initiative is projected to start April 1, 2020.

In Depth

On March 25, 2020, the Internal Revenue Service (IRS) announced a new People First Initiative designed to provide relief to taxpayers on a variety of issues ranging from easing payment guidelines to postponing compliance actions in light of the challenges caused by the Coronavirus (COVID-19) pandemic. The initiative’s projected start date is April 1, 2020, and it is planned to continue through at least July 15, 2020. During this period, the IRS will avoid in-person contacts as much as possible while focusing on taking the steps necessary to protect all applicable statutes of limitation.

The IRS will share more specifics in the future. In the meantime, the highlights are summarized below.

IRS Examination Activities

  • Examinations: During the period of the initiative, the IRS will generally not start new examinations. An exception will be situations where a new examination is necessary to protect against the expiration of the applicable statute of limitations. Existing examinations will continue without in-person meetings, as revenue agents will continue examinations remotely. Refund claims will continue to be worked where possible.
  • Appeals: Appeals officers will continue to work cases and will hold conferences over the telephone or videoconference.
  • Statute of Limitations: Similar to the government shutdowns in the past, the IRS will seek statute extensions in audits to preserve the period for assessing taxes. If the applicable statute of limitations will not expire in 2020, the IRS does not plan to seek an extension or issue a notice of deficiency until after July 15, 2020.

Tax Collection Activities

  • Installment Agreements and Offers in Compromise (OIC): Payments due under existing installment agreements and OICs will be suspended during the initiative period, although interest will continue to accrue. Some prerequisites for OICs will be waived.
  • Collection Activities: Many liens and levies will be suspended during the initiative period. The IRS will not forward new delinquent tax accounts to private collection agencies during this period.

Other Matters

  • Passport Certifications: The IRS will suspend notifying the US Department of State of taxpayers with seriously delinquent tax accounts that might prevent the receipt or renewal of passports.
  • Earned Income Tax Credit (EITC) and Wage Verification: Taxpayers will have additional time to verify qualification for the EITC. The IRS will not deny the EITC for failure to provide such information prior to July 15, 2020.
  • Practitioner Priority Services (PPS): PPS is the telephone hotline for taxpayer representatives to obtain account information for their clients. Expect significant wait times for PPS. We have heard from many representatives that, despite the IRS’s statement that PPS remains open, calls are not going through.

For more information about the tax impact of the COVID-19 emergency declaration, see our recent insights.