COVID-19

TODAY (July 15th) is the tax deadline. Some COVID-19 relief is also ending.

by
Bob Mason
on
7/14/2020
TODAY (July 15th) is the tax deadline. Some COVID-19 relief is also ending.

During the pandemic, the Internal Revenue Service pushed back the due date for individual tax returns to July 15th.  However, in addition to tax returns becoming due today, several other relief provisions that were made available for taxpayers through the People’s First initiative will also lapse.

The relief was meant to help taxpayers who are having difficulty making payments of their tax obligations and who may have been impacted by the COVID-19 global health pandemic.

The initiative included provisions to help those who have installment agreements and offers in compromise, as well as other individuals who may currently be in a delinquent tax status with the Internal Revenue Service.

We will take a look at each one of these items in more detail and look at the potential impact of termination of the initiative.

The People First Initiative

The People First Initiative is one of the relief programs offered by the Internal Revenue Service for individual taxpayers and businesses that is set to expire on July 15th, 2020.  The initiative was approved in late March of 2020 and covers the time period from April 1st, 2020 to July 15th, 2020.

Under the People First Initiative, the payments required under an in-place installment agreement were suspended between April 1st and July 15th, 2020.  Taxpayers should resume with their payments on the first payment date following the July 15th end date.

For example, if the ordinary payment date under your installment agreement is the 10th of each month, you would make your first installment payment following the end of the initiative on August 10, 2020.

For those with an approved offer in compromise (OIC) from the Internal Revenue Service, payments could be suspended between April 1st and July 15th, but will resume on the first due date following the termination of the People First Initiative on July 15th.  As with the example above, if your payment due date is the 7th of each month, you would resume payments on your offer in compromise on August 7, 2020.

For those with delinquent tax returns for the tax year 2018, the deadline for filing those outstanding returns will be July 15, 2020.

For the duration of the initiative, IRS representatives ceased their field activities for collection of tax obligations owed during the People First initiative time frame.  The Internal Revenue Service will now restore field collection activities and any automatic liens and levies that were suspended during this time will be reinstated.

As a part of the People First Initiative, the Internal Revenue Service stopped their notification to the State Department of taxpayers who were seriously delinquent on their tax obligations.

Ordinarily, a report of seriously delinquent tax status to the State Department would prevent the taxpayer from applying for or renewing a passport application.  The passage of the People First initiative temporarily halted this process.

For those with past due accounts, the Internal Revenue Service will also return to forwarding the past due account information on to private debt agencies for collection.

For taxpayers who are currently under audit with the Internal Revenue Service, the People First Initiative suspended field, correspondence, and office audits in most cases, with the exception of cases where the statute of limitations could be compromised and in few other instances.  The Internal Revenue Service will resume their examination activities now that the July 15th deadline has arrived.

What Happens Now?

While taxpayers must file their individual tax returns by TODAY, July 15th, they may be eligible to file an extension which would provide additional time to file their returns.

It is important to note, however, that an extension of time to file your return is not an extension of time to pay your taxes.  Any taxes anticipated to be owed for the 2019 tax year should be paid by July 15th, 2020 in order to avoid interest and penalties.

For those with installment agreements or an offer in compromise with the Internal Revenue Service, you should resume your repayment plan on the first payment due date following July 15th.  It is important to note that while no payments were required during the People First Initiative time period, interest continued to accrue on any outstanding balance owed.

Taxpayers who are unable to make up the missed payments immediately should contact the IRS to request that their payment agreement be modified.

While the IRS has noted that they have discretion to extend provisions within the People First Initiative, no extension has been granted at this time.

If you or your family are impacted by the termination of the People First Initiative, please consider contacting a tax advisor who can help you to navigate the next steps in understanding your options.

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Bob Mason

Bob Mason

Bob Mason is the founder of Coast Financial Services Inc. servicing both the Santa Cruz, and San Jose areas. Bob Mason is a skilled financial professional who is fully equipped to assist any of your accounting needs. Founding his firm in Santa Cruz, Bob understands the importance of small businesses and how they form the backbone of the area. Coast Financial Services, Inc. has been dedicated to the growth and profitability of businesses in Santa Cruz for 17 years. To learn more about Bob Mason and the rest of his team, visit their website.

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