IRS compliance and collection policies post July 15

| 7/30/2020
IRS compliance and collection policies post July 15

Earlier this year in the wake of the COVID-19 pandemic, the IRS closed offices and ceased many of its operations and services, including taxpayer and practitioner phone lines. As a result, the IRS delayed most filing and payment due dates arising on and after April 1, 2020, until July 15, 2020, and implemented its People First Initiative to pause most compliance and collection activity until July 15, 2020. While the IRS continued to process electronically filed returns and payments during this period, unopened correspondence mailed to the IRS piled up in trailers, creating a severe backlog of unread taxpayer correspondence, including tax returns, claims for refund, and responses to IRS notices.

Now that July 15 has passed, the IRS has provided information about how it is restarting operations paused as a result of COVID-19. For instance, automated phone lines for taxpayers and practitioners have reopened, though wait times might be long. Many services remain limited, however, because significant agency resources are being devoted to opening mail. For example, the Small Business/Self-Employed Division has stated that its correspondence function should begin again in mid-August.

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Following are additional highlights of how the IRS is resuming operations:

  • Notices. The IRS has sent notices that were planned to be, but were not, issued prior to the pandemic. These generally are payment reminders and pre-lien notices. Automated lien and levy notices remain paused. Most of the suspended notices now include an insert that specifies a delayed due date for action until July. However, due to an IRS error some suspended notices were sent without the insert indicating the new due date. Taxpayers with questions should contact the IRS. 
  • Exams. The IRS is beginning new examinations, though in-person contact is likely to be limited. In some cases, the IRS will request that the taxpayer selected for audit agree to an extension of the period of limitations on assessment to delay the start of the audit.
  • Appeals. The Independent Office of Appeals is working cases but generally will not hold in-person conferences before September.
  • Payment plans. Payments under existing installment agreements and accepted offers in compromise that were paused under the People First Initiative have restarted.
  • Collection. New collection activities generally remain paused, though high-risk or high-priority cases will continue to be pursued, and actions already in process likely will move forward. 

Preparing for IRS action

IRS personnel have been instructed to consider each taxpayer’s particular COVID-19 circumstances, but these circumstances might not stop IRS activity altogether. However, the IRS might be more flexible about response times and meeting locations. While virtual or telephone meetings might be available in circumstances where they were not available before, they might not be desirable in some cases but might be the only way to engage with the IRS. COVID-19 also might present opportunities for quicker or more favorable resolution of certain matters even as it slows down resolution in other situations. Working with a qualified tax adviser to keep abreast of the latest IRS operations developments can help taxpayers determine the best response when contacted by the IRS.

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Rochelle Hodes
Rochelle Hodes
Principal, Washington National Tax