In a news release (IR-2020-248)[1] the IRS announced relief for taxpayers in various collection activities to help taxpayers struggling due to COVID-19.

The release outlines the reasons for the changes:

The IRS assessed its collection activities to see how it could apply relief for taxpayers who owe but are struggling financially because of the pandemic, expanding taxpayer options for making payments and alternatives to resolve balances owed.

“The IRS understands that many taxpayers face challenges, and we’re working hard to help people facing issues paying their tax bills,” said IRS Commissioner Chuck Rettig. “Following up on our People First Initiative earlier this year, this next phase of our efforts will help with further taxpayer relief efforts.”

“We want people to know our IRS employees are committed to continue helping taxpayers wherever possible, including offering many options for those struggling to pay their tax bills,” said Darren Guillot, the IRS Small Business/Self-Employed Deputy Commissioner for Collection and Operations Support. Guillot discussed the new relief options in a new edition of IRS “A Closer Look.”[2]

The release summarized the relief as follows:

The revised COVID-related collection procedures will be helpful to taxpayers, especially those who have a record of filing their returns and paying their taxes on time. Among the highlights of the Taxpayer Relief Initiative:

• Taxpayers who qualify for a short-term payment plan option may now have up to 180 days to resolve their tax liabilities instead of 120 days.

• The IRS is offering flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted Offer in Compromise.

• The IRS will automatically add certain new tax balances to existing Installment Agreements, for individual and out of business taxpayers. This taxpayer-friendly approach will occur instead of defaulting the agreement, which can complicate matters for those trying to pay their taxes.

• To reduce burden, certain qualified individual taxpayers who owe less than $250,000 may set up Installment Agreements without providing a financial statement or substantiation if their monthly payment proposal is sufficient.

• Some individual taxpayers who only owe for the 2019 tax year and who owe less than $250,000 may qualify to set up an Installment Agreement without a notice of federal tax lien filed by the IRS.

• Additionally, qualified taxpayers with existing Direct Debit Installment Agreements may now be able to use the Online Payment Agreement system to propose lower monthly payment amounts and change their payment due dates.[3]

The news release then goes on to provide some more specific details for various items of relief under the new initiative.

Installment Plans and Payment Agreements

The news release provides the following additional information regarding installment plans and payment agreements:

The IRS offers options for short-term and long-term payment plans, including Installment Agreements via the Online Payment Agreement (OPA) system. In general, this service is available to individuals who owe $50,000 or less in combined income tax, penalties and interest or businesses that owe $25,000 or less combined that have filed all tax returns. The short-term payment plans are now able to be extended from 120 to 180 days for certain taxpayers.

Installment Agreement options are available for taxpayers who cannot full pay their balance but can pay their balance over time. The IRS expanded Installment Agreement options to remove the requirement for financial statements and substantiation in more circumstances for balances owed up to $250,000 if the monthly payment proposal is sufficient. The IRS also modified Installment Agreement procedures to further limit requirements for Federal Tax Lien determinations for some taxpayers who only owe for tax year 2019.[4]

Temporarily Delaying Collection

The notice reminds taxpayers about options for the IRS to temporarily delay collections:

Taxpayers can contact the IRS to request a temporary delay of the collection process. If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer's financial condition improves.[5]

This portion of the release links to an IRS webpage[6] on such temporary delays and the currently not collectible status.  In part that page provides:

If we determine that you cannot pay any of your tax debt, we may report your account currently not collectible and temporarily delay collection until your financial condition improves. Being currently not collectible does not mean the debt goes away, it means the IRS has determined you cannot afford to pay the debt at this time. Prior to approving your request to delay collection, we may ask you to complete a Collection Information Statement (Form 433-F, Form 433-A or Form 433-B) and provide proof of your financial status (this may include information about your assets and your monthly income and expenses). You should know that if we do delay collecting from you, your debt will increase because penalties and interest are charged until you pay the full amount. During a temporary delay, we will again review your ability to pay. We may also file a Notice of Federal Tax Lien to protect the government's interest in your assets.[7]

The page directs taxpayers looking to ask for a temporary delay in collection activities to call 1-800-829-1040 or the phone number on their bill or notice.[8]

Offer in Compromise

The release goes on to discuss offer in compromise as an option, as well as certain changes to the program due to COVID-19:

Certain taxpayers qualify to settle their tax bill for less than the amount they owe by submitting an Offer in Compromise. To help determine eligibility, use the Offer in Compromise Pre-Qualifier tool.[9] Now, the IRS is offering additional flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted offer in compromise.[10]

Taxpayers are directed to the IRS’s main offer in compromise page[11] for additional information.

Relief from Penalties

Finally, the news release highlights options for taxpayers to seek relief from penalties.  The page provides:

The IRS is highlighting reasonable cause assistance available for taxpayers with failure to file, pay and deposit penalties. First-time penalty abatement relief is also available for the first time a taxpayer is subject to one or more of these tax penalties.[12]

Taxpayers are directed to the following IRS pages via links to deal with penalties:

• “Penalty Relief Due to First Time Penalty Abatement or Other Administrative Waiver”[13] to obtain general information on administrative relief from penalties.

• “Penalty Relief Due to Reasonable Cause,”[14] for more specific information on cases where reasonable cause relief from a penalty may be granted.

[1] “IRS makes it easier to set up payment agreements; offers other relief to taxpayers struggling with tax debts,” IR-2020-248, IRS website, November 2, 2020, https://www.irs.gov/newsroom/irs-makes-it-easier-to-set-up-payment-agreements-offers-other-relief-to-taxpayers-struggling-with-tax-debts (retrieved November 3, 2020)

[2] Darren Guillot, “New Relief for Taxpayers Experiencing COVID-19-related Financial Difficulties,” A Closer Look, IRS website, November 2, 2020, https://www.irs.gov/about-irs/irs-offers-new-relief-options-to-help-taxpayers-affected-by-covid-19 (retrieved November 3, 2020), IR-2020-248

[3] IR-2020-248

[4] IR-2020-248

[5] IR-2020-248

[6] “Temporarily Delay the Collection Process,” IRS webpage, October 25, 2020 https://www.irs.gov/businesses/small-businesses-self-employed/temporarily-delay-the-collection-process (retrieved November 3, 2020)

[7] “Temporarily Delay the Collection Process,” IRS webpage, October 25, 2020

[8] “Temporarily Delay the Collection Process,” IRS webpage, October 25, 2020

[9] https://irs.treasury.gov/oic_pre_qualifier/ (retrieved November 3, 2020)

[10] IR-2020-248

[11] “Offer in Compromise,” IRS webpage, September 28, 2020 https://www.irs.gov/payments/offer-in-compromise (retrieved November 3, 2020)

[12] IR-2020-248

[13] https://www.irs.gov/businesses/small-businesses-self-employed/penalty-relief-due-to-first-time-penalty-abatement-or-other-administrative-waiver, June 12, 2020 (retrieved November 3, 2020)

[14] https://www.irs.gov/businesses/small-businesses-self-employed/penalty-relief-due-to-reasonable-cause, March 20, 2020 (retrieved November 3, 2020)