IWTA Breaking Tax News: November 2, 2020

IRS Introduces Tax Relief Measures for Those Impacted by Covid-19

On November 2, 2020 the Internal Revenue Service announced changes designed to de-stress taxpayers filing late 2019 returns, and those that have fallen behind on previously-negotiated installment agreements or otherwise struggling to pay balances owed.

In short, any taxpayer struggling financially due to the pandemic can take comfort in and advantage of the second phase of tax relief, or what the IRS calls its “People First” initiative. These tax relief measures apply to small business owners too, who have been hurt badly by the pandemic-induced economic slowdown.  Many taxpayers requesting payment plans, including Installment Agreements, may apply online, using IRS.gov without ever having to talk to a representative.

Darren Guillot, the IRS Small Business/Self-Employed Deputy Commissioner for Collection and Operations Support, discussed the just-announced tax relief options in a new edition of the IRS blog, “A Closer Look.”

In addition to setting up payment plans and payment agreements, the IRS is offering expanded tax relief services in the following areas:

• Temporarily Delaying CollectionIf the IRS determines the taxpayer is unable to pay, they may qualify.
• Offer in CompromiseFor some taxpayers who are temporarily unable to meet the payment terms of an accepted offer in compromise, the IRS is offering more flexible arrangements.
• Relief from PenaltiesThe IRS is offering reasonable cause assistance and first-time penalty abatement relief.

Specific tax relief options highlighted by the IRS are listed below. Note: these options are listed exactly as they appear on the IRS website:

• 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.

Disaster Tax Relief for Victims of Hurricanes and Wildfires

2020 has wrought a torrent of disasters down on the people of the USA. In addition to the devastating loss of life and livelihood due to Covid-19, many Americans on the West Coast have suffered all matter of damage to life and limb, business and property due to raging wildfires. Southern and mid-Atlantic states have suffered devastation due to a sequential series of hurricanes. Puerto Rico experienced an earthquake.

The IRS recognizes that tax relief is needed for the victims of 2020 natural disasters.   Use this page to access a complete listing of disaster tax relief by state and type. Many have been extended beyond the initial cutoff dates.

If you find yourself or your business in need of help in navigating the new tax relief measures, what you may qualify for, and expertise in negotiating with the IRS, don’t hesitate to contact us. Check the IWTA list of specialized services in cross-border tax, foreign trusts tax consulting, foreign investment tax issues, etc., for more ways we can help.