Tax Notes logo

Exams, Payments Suspended in IRS Coronavirus Response

Posted on Mar. 26, 2020

The IRS won praise from the tax community for a raft of administrative and operational changes in response to the coronavirus pandemic.

The agency announced March 25 that starting April 1 and extending initially through July 15, its People First Initiative will, among other emergency measures, suspend the following: payments on existing installment agreements; actions on liens, levies, and most seizures; most new field, office, and correspondence examinations; and new certifications of severely delinquent taxpayers to the State Department for potential passport revocation.

“Hats off to IRS Commissioner [Charles] Rettig for providing these good, common-sense, taxpayer-friendly provisions during these tough days for our nation,” Dean Zerbe, national managing director at Alliantgroup LP, told Tax Notes. “The IRS is right to recognize that not having to worry about the IRS knocking on the door will be most welcome to business owners and families.”

Former National Taxpayer Advocate Nina Olson said she was pleased to see that the IRS won’t refer new delinquent taxpayer accounts to its private tax debt collection program through at least July 15. She also noted that the IRS is promoting offers in compromise as well as installment agreements for overdue taxpayers. The IRS “usually does not point taxpayers in the direction of OICs,” she said.

Acting National Taxpayer Advocate Bridget Roberts lauded the IRS’s earned income tax credit income verification extension. The Taxpayer Advocate Service is also working with taxpayers to find innovative ways to quickly document things like relationship status when schools and doctors’ offices are closed, Roberts said on a March 25 American Bar Association Section of Taxation conference call.

Questions Remain

Tax professionals generally praised the tone and content of the IRS’s new initiative.

“I love that Commissioner Rettig included the paragraph about IRS employees caring about our people and our country in the news release,” said enrolled agent Phyllis Jo Kubey. “It’s an important point, and as IRS employees face the same challenges as everyone else, they are ready and willing to help.”

Yet the IRS’s coronavirus response also left Kubey with important client questions. The agency hasn’t provided instructions for how to fix e-file tax returns rejected with error messages that can’t be resolved for e-filing, such as those involving the tax situation of a deceased spouse, she said. “Taxpayers who get these e-file rejections have to file their 2019 tax returns by mail,” she noted.

Despite the IRS’s statement that the practitioner priority service phone lines may have longer wait times, Robert Kerr, executive vice president at the National Association of Enrolled Agents, said his constituents’ reports indicate that the lines “are for all intents and purposes closed for business.”

Kerr also noted that the announcement that the IRS’s new automated liens and levies system has been suspended leaves unclear what happens to taxpayers already in the enforcement pipeline. “If my client received a CP90, ‘Notice of Intent to Seize Assets and Notice of Your Right to a Hearing,’ last week, what happens next?” Kerr asked. “Taxpayers and their representatives cannot, practically, reach enforcement or Taxpayer Advocate [Service] staff. And not to put too fine a point on it, taxpayers have a right to representation.”

Olson said it’s unclear whether the IRS will defer issuing notices of deficiency in correspondence audits, “and there are a ton of these EITC audits in-house right now,” she said. The IRS announcement “says people should continue to send in documentation, but then who is going to process that documentation? Who is going to answer the phone when these low-income taxpayers have questions? And it seems to me that these taxpayers are the ones who will need the EITC and stimulus payment immediately,” Olson said.

And some think the IRS still has a way to go in providing comprehensive relief. Melissa Labant, director for tax policy and advocacy at the American Institutes of CPAs, said her organization “believes it’s crucial for Treasury and the IRS to grant relief in every form and manner in which they have authority.”

“In that regard, we continue to urge Treasury and the IRS to extend relief to all tax filers, not just April 15th filers, and apply it to all returns, information filings, estimated taxes, elections, correspondence, etc.,” Labant said. She said the relief should also apply to gift, estate, generation-skipping, and excise taxes.

Still Minding the Store

“During this difficult time, we want people working together, focused on their well-being, helping each other and others less fortunate,” Rettig said in a statement accompanying the IRS release. “The new IRS People First Initiative provides immediate relief to help people facing uncertainty over taxes.”

Among other measures, the IRS won’t default an existing OIC for taxpayers delinquent in filing their 2018 tax returns. It will give taxpayers until July 15 to support any pending OICs, and won’t close any pending requests without the taxpayer’s consent. New automated systemic levies and liens will be suspended for the duration of the crisis, the IRS said.

The agency further made a pitch for continued taxpayer compliance. It noted that more than 1 million households that haven’t filed returns in the past three years are actually owed money, although the time for some to collect it is running low. The IRS also encouraged taxpayers unable to pay in full to apply for a monthly installment agreement or OIC at its website.

But the IRS announcement also made clear that the agency is minding its books.

“The IRS will continue to take steps where necessary to protect all applicable statutes of limitations,” the announcement said. While the agency suspended most new exams through July 15, it “may start new examinations where deemed necessary to protect the government's interest in preserving the applicable statute of limitations.”

The new independent Office of Appeals is still in business, although conferences may be held over the phone or via videoconference. “Taxpayers are encouraged to respond promptly” to IRS communications about appeals and other agency matters.

“Taxpayers are encouraged to cooperate” in extending statutes of limitations at the request of the government, the IRS said. “Otherwise, the IRS will issue Notices of Deficiency and pursue other similar actions to protect the interests of the government in preserving such statutes.” But unless the statute expires during 2020, the IRS is unlikely to act until at least July 15, the agency said.

Nathan J. Richman and Jonathan Curry contributed to this article.

Copy RID