IRS’ People First Initiative Changes Collections Procedures

March 27, 2020Alerts

The IRS has announced widespread changes to its normal collection procedures to help taxpayers face the challenges of COVID-19.

The IRS suspended payments due between April 1, 2020 and July 15, 2020 for taxpayers under existing installment agreements. This will also apply to taxpayers under Direct Deposit Installment Agreements, but it is currently unclear how taxpayers can contact the IRS to ask the agency to suspend those withdrawals. The IRS will not default any installment agreements during the period from April 1, 2020 to July 15, 2020. Taxpayers that are eligible for streamlined installment agreements can still enter into those agreements through the IRS website here.

Taxpayers with pending offers in compromise (OIC) are allowed to provide requested additional information to support the OIC until July 15, 2020. The IRS will not close any pending OIC requests before July 15, 2020 without the taxpayer’s consent. Taxpayers have the option to suspend all payments on accepted OICs until July 15, 2020. The IRS will not default an OIC for taxpayers who have not filed their 2018 or 2019 tax returns before July 15, 2020. However, taxpayers should be aware that they will need to file their 2018 tax return and their 2019 tax return, if not under extension, to prevent the IRS from defaulting their OIC after July 15, 2020. Taxpayers who qualify for the OIC program are encouraged to continue filing their OICs.

Systemic Liens and Levies

The IRS is suspending all new automatic, systemic liens and levies until July 15. These notices are typically computer-generated a few days or weeks in advance, so taxpayers may still receive notices over the next few weeks. Taxpayers should not ignore the notices and should continue to respond with timely requests for collection due process hearings when appropriate. As of Monday, March 23, 2020, the IRS is not available through its call centers, so taxpayers need to send their responses in writing by USPS certified mail for proof of mailing. There is no indication as to when the call centers will be reopened.

The IRS is also suspending liens and levies (including any seizure of personal residence) initiated by field revenue officers during this period. However, the IRS emphasized that field revenue officers will continue to pursue high-income non-filers and perform other similar activities where warranted. The notice reports that over 1 million households have not filed a tax return during the last three years and are actually owed a refund. Taxpayers still have time to file their individual returns and claim a refund for the 2016, 2017, 2018, and 2019 tax years.

New Passport Certifications Suspended

The IRS is suspending new passport certifications to the State Department for taxpayers who have “seriously delinquent tax debt.” This generally applies to taxpayers who owe more than $53,000 in tax, interest and penalties who do not qualify for one of several exceptions, including taxpayers under an existing installment agreement or those who file for an OIC. Certification to the State Department prevents taxpayers from receiving or renewing passports. The IRS does not give guidance for individuals with previously certified tax debts that come into compliance before July 15. However, the IRS is supposed to reverse the certification with 30 days of compliance and provide the State Department with notification “as soon as practicable."

The IRS will not forward any new delinquent accounts to private collection agencies. There is no guidance addressing taxpayers whose debts are already being worked by those agencies.

The notice makes clear that the exam and appeals functions of the IRS are still working during this period. The IRS is generally not starting any new field, office or correspondence examinations, but it will continue to start new examinations and work examination when the IRS deems them necessary to protect the applicable statute of limitations. Taxpayers should not ignore notices from the examination division and should make every effort to respond to the IRS examination notice, even if to explain that the taxpayer is not currently able to fully comply with the IRS’ request. The IRS is suspending in-person meetings, but staff will continue to conduct examinations remotely, where possible. The Office of Appeals continues to work its cases and will continue to hold appeals conferences with taxpayers by telephone or video conference.