IRSAC Suggests Administrative Relief in Response to Coronavirus

March 16, 2020

Internal Revenue Service
Commissioner Charles P. Rettig
1111 Constitution Avenue, NW
Washington, DC 20224

Dear Commissioner Rettig,

I write on behalf of the IRS Advisory Council (IRSAC) to express our support for and appreciation of all IRS staff and their families and to request some administrative relief that we believe would ease the burden on taxpayers and the IRS as the nation faces the COVID-19 pandemic, requiring us all to work together to limit everyone's exposure.

Specifically, at present, with the understanding that additional federal funds may well be necessary to implement our recommendations and other remedial measures, we urge the IRS to (a) offer either (i) an automatic extension of filing and payment deadlines at least until one of the upcoming dates for estimated payments (June 15, 2020 or September 15, 2020) or (ii) an automatic abatement of failure to file, pay and deposit penalties at least until one of the upcoming dates for estimated payments (June 15, 2020 or September 15, 2020), (b) provide at least temporary relief from physical signatures on all tax returns by applying the standard that is available to paid preparers, (c) consider permitting electronic signatures on Powers of Attorney, (d) require that, to the extent possible, all written communications be sent by electronic mail or fax rather than by mail, (e) provide relief where deadlines are missed, particularly in collection cases, and (f) provide relief for accidental residents.

Automatic Extension or Automatic Penalty Relief

Insofar as people are being discouraged from personal interaction, it seems likely that many taxpayers, including individuals, businesses and other entities, will find it challenging to gather information necessary to meet filing deadlines, to engage with tax professionals (or volunteers who provide assistance through VITA and low-income tax clinics), and to timely file either accurate tax returns or extension requests. Further, although some of the tax filing season work of the IRS is automated, some of it does require on-site work by individual employees and we share your concern for their physical and emotional security. Finally, many individuals and businesses are experiencing unexpected financial hardship, including a dramatic decline in reasonably anticipated income. We understand the federal and state governments are attempting to address those issues on a substantive level and we believe it would be appropriate for the IRS, to the extent possible, to administratively support individuals and businesses facing these challenges. We also think such action would instill further confidence in the IRS and thereby enhance its goal of voluntary compliance.

We recognize that any automatic extension of a deadline or automatic abatement of penalties imposes a technological burden, so the IRSAC recommends that the IRS offer the most easily internally administrable of the following options: either an automatic extension of time to file tax returns and time to pay tax or an automatic abatement of failure to file, pay and deposit penalties (without treating the abatement as a first time penalty abatement) at least until one of the upcoming dates for estimated payments — June 15, 2020 or September 15, 2020. We believe California has already extended its deadline for filing and payment through June 15, 2020 and also note that certain taxpayers, particularly certain fiscal year taxpayers, might have a need for a longer extension and that perhaps refunds could be expedited for those who do file by the original deadline.

Signature Relief

Certain business tax return filings that are not permitted to be electronically filed must be physically signed and dated by an officer of the company. In a pandemic environment where teleworking is encouraged or required, business taxpayers are faced with the challenge of delivering a paper copy of each tax return to the applicable authorized signatory, and then collecting those signed paper tax returns to timely mail them to the IRS. A paid preparer, however, may sign original or amended returns by rubber stamp, mechanical device, or computer software program.

The IRSAC recommends that the IRS issue guidance providing at least temporary relief from physical signatures on all tax returns by applying the same standard that is available to paid preparers.

Electronic Signatures on Powers of Attorney

Many individual taxpayers, persons responsible for filing entity tax returns, and tax professionals are working from home without the capacity to physically sign and/or deliver documents once signed, including Powers of Attorney. We recognize that there are valid security concerns that generally compel the requirement that such forms be physically signed by both taxpayers and tax professionals. However, insofar as it is imperative that personal interactions be limited for some as yet undetermined period of time, the IRSAC recommends that electronic signatures be permitted on Powers of Attorney (and similar documents) at least until June 15, 2020.

Faxing/Emailing Written Communications

In order to ensure that taxpayers and tax professionals receive written communications during this period when many are teleworking, and also to facilitate communications with the IRS and ease the burden on employees of the IRS and the postal service, the IRSAC recommends that, where email and fax numbers are available to the IRS, written communications be emailed or faxed to taxpayers and tax professionals at least until June 15, 2020. Such a communication might require some mechanism to authenticate it to avoid fraud, including advance telephonic agreement of both parties to communicate in that way. Secure communication would be best, but might not be available to all taxpayers or tax professionals at this time.

Deadline and Collection Relief

Taxpayers and tax professionals, despite their best efforts, may miss deadlines as they deal with the challenges of a pandemic. The IRSAC recommends that, at least with regard to non-statutory deadlines, the IRS afford penalty-free extensions wherever possible, at least until June 15, 2020. Taxpayers with installment payment plans or other extended payment arrangements and taxpayers who are on the verge of severe collection activity may be particularly vulnerable to the sudden economic shift.

The IRSAC recommends that otherwise compliant taxpayers who miss payments in connection with formal payment agreements (such as Installment Agreements and Offers in Compromise) between now and either June 15, 2020 or September 15, 2020 not have those agreements defaulted due to failure to timely file or timely pay (including payments under those agreements). The IRSAC also recommends that the IRS consider a three month hold on enforced collection activity where there is a risk of extraordinary economic harm (i.e. loss of business or home).

Relief for Accidental Residents

Some non U.S. persons are now, and will continue to be, stranded in the United States. As a result of the substantial presence test, some of these people may end up being tax residents who clearly did not intend to be tax residents in the United States. The IRSAC recommends that the IRS consider offering relief to persons who are unable to return to their home countries due to circumstances relating to COVID-19.

Conclusion

The IRSAC appreciates your consideration of these recommendations and commends your efforts to support the IRS community as well as the taxpayer and tax professional communities. We also appreciate federal (and state) efforts to address tax issues arising in connection with COVID-19 and trust that adequate funding will be provided to the IRS to permit the institution to act quickly and effectively to implement these and other appropriate remedial measures.

To the extent we as a group or any of our individual members may be of assistance, please do not hesitate to contact me. As I will be working from home for the foreseeable future, I will also provide my personal cell phone information by separate email.

Very truly yours,

Diana L. Erbsen
Chair, IRSAC

DLA Piper LLP (UB)
New York, NY