IRS Provides Updates on Compliance, Exam Activities Through July 15
In two Tax Tips, the IRS has provided updates on its suspended compliance and examination activities through the July 15, 2020 filing and payment deadline.
On March 25, 2020, the IRS announced its People First Initiative and, as part of this initiative, suspended certain compliance and examination activities due to the coronavirus.
Tax Tip 2020-56. In Tax Tip 2020-56, the IRS has provided the following updates on its suspended compliance activities through the July 15, 2020 filing and payment deadline:
- Existing installment agreements. Payments due under an existing installment agreement between April 1 and July 15, 2020 are delayed until July 15, 2020. Those taxpayers currently unable to meet the terms of an existing Installment Payment Agreement may skip payments during this period with no default. By law, interest will continue to accumulate on any unpaid balances.
- New installment agreements. Taxpayers who can't pay all their federal taxes can establish an installment agreement using the IRS's online application.
- Pending Offer in Compromise (OIC) applications. Taxpayers have until July 15, 2020, to provide additional information for a pending OIC. The IRS generally won't close any pending OIC request before July 15 without the taxpayer's consent.
- OIC payments. Taxpayers can delay all payments on accepted OICs until July 15, 2020. Interest may accrue, and missed payments are due when the suspension period ends. Taxpayers can call the number on their OIC acceptance letter if they have any questions about their OIC payments.
- No OIC default for delinquent return filings. The IRS will not default an OIC for taxpayers who are delinquent in filing their tax return for 2018. However, they should file any delinquent 2018 return and their 2019 return by July 15, 2020.
- 2016 refund deadline. The deadline to get refunds on 2016 tax returns is July 15, 2020.
- Field collection activities. The IRS has stopped field revenue officer enforcement actions, such as liens and levies. Revenue officers will continue to pursue high-income non-filers and perform "other similar activities" where necessary.
- Automated liens and levies. The IRS has delayed issuing new automated and systemic liens and levies. Taxpayers experiencing a hardship due to a levy should reach out to their assigned IRS contact or fax their information to 855-796-4524.
- Certifications to the State Department. IRS has delayed new certifications of taxpayers who are considered seriously delinquent. This affects a person's ability to receive a new or renewed passport. Existing certifications will remain in place unless their tax situation changes.
- Private debt collection. The IRS will not forward new delinquent accounts to private collection agencies until after July 15, 2020.
Tax Tip 2020-57. In Tax Tip 2020-57, the IRS has provided the following updates on its examination and audit activities through July 15, 2020:
Field, office, and correspondence audits. Generally, the IRS will not start new field, office or correspondence audits before July 15, 2020. However, the IRS may start new audits if needed to preserve the limitations period.
In-person meetings for current field and office audits are still on hold but, when possible, examiners continue to work their cases remotely.
The IRS may move forward with an audit when
- It is in the best interest of both parties, and
- Appropriate representatives of both parties are available.
Earned income tax credit (EITC) and wage verification reviews. Taxpayers have until July 15, 2020, to respond to any IRS correspondence asking them to verify
- That they qualify for the earned income tax credit, or
- Their income.
These taxpayers should submit all the requested information as soon as possible. The IRS won't deny the EITC for a failure to provide information until July 15, 2020.
Limitations periods. If a limitations period is about to expire, the IRS encourages taxpayers to cooperate in extending that limitations period. If a taxpayer fails to cooperate in extending the limitations period, the IRS will take any actions necessary to protect the interests of the government.
The IRS previously stated, in IR 2020-59, when a statutory period is not set to expire during 2020, the IRS is unlikely to ask the taxpayer to extend that period before July 15, 2020.