IRS People First Initiative Ends Today – What happens now?

By:  Derek Wheeler

Today, July 15th, the IRS’ People First Initiative will come to an end. Implemented at the end of March as COVID-19 began spreading throughout the United States and large parts of the country began to shutdown, the People First Initiative relieved taxpayers of many impending tax burdens. Filing deadlines were extended, installment payment agreements were suspended, and a vast amount of IRS collection and compliance activity was halted. Many states followed suit in granting taxpayers filing and payment relief. Yet, despite there seemingly being no end in sight to the COVID-19 pandemic nationwide, the People First Initiative has come to an end. What does that mean for taxpayers?

FILING & PAYMENT DEADLINES

For tax year 2019, returns and payments are due by July 15th. Taxpayers may request an extension to file ONLY. There is no extension to pay, so if taxpayers are unable to file by July 15th, they should still be making a payment on their anticipated 2019 liability. This is especially crucial for taxpayers who have previously entered into an installment payment plan or have had an offer in compromise accepted. Failure to pay estimated payments or the 2019 tax due could result in the payment plan or offer defaulting. Furthermore, both the first and second quarter estimated payments are due on July 15th. Taxpayers should be wary of the immediacy of these payments and do their best to meet these obligations.

PAYMENT PLANS AND OFFERS

Installment payments were suspended from April 1st through July 15th. The IRS issued a news release on July 8th reminding taxpayers that they will need to resume payments. If the taxpayer had direct debit payments suspended through their bank and wish to resume their payment agreement, they will need to contact their bank with sufficient time to allow the bank to authorize release of the funds by the taxpayer’s regularly scheduled direct debit date. If the taxpayer is still unable to make payments due to financial distress, they can reach out to the IRS to adjust their payment plan or seek out a different collection alternative.

If a taxpayer’s offer was accepted prior to April 1st, their payment obligation was temporarily halted until July 15th. However, the most recent IRS press release indicates taxpayers should resume payments and make up any missed payments by July 15th. If taxpayers are unable to do so, they are advised to contact the IRS. However, contacting the IRS in the short-term, with limited staffing and questions about the filing deadline, will likely be difficult.

LEVY AND LIEN ACTIONS

With some exceptions, the People First Initiative prohibited the filing of new notices of federal tax lien, though IRS continued to process lien release and discharge applications throughout this time.

With the expiration of the People First Initiative, the IRS will resume enforced collection through the issuance of levies and liens. However, taxpayers may have received notices dated before July 15th warning of impending enforced collection action. It is essential that taxpayers not ignore these notices, as deadlines to respond to these notices were only extended until July 15th. After July 15th, without further guidance, the IRS is free to resume its normal operations. Taxpayers must be vigilant in responding to any notice they receive to ensure that the IRS is aware of the taxpayer’s disagreement with the proposed collection action or their request for a collection alternative. Taxpayers should attempt to fax these responses, if possible, as IRS shutdowns are causing significant processing delays of mailed correspondence.

Specifically, the IRS has been issuing notices of intent to levy Social Security benefits and other time sensitive notices to multiple taxpayers that already should have collection holds for various reasons. This is an alarming development, as many of these notices are dated well before July 15th, with some being dated as far back as late April. It is vital to respond to these notices, as Social Security levies can be extremely damaging to clients and affects those that are elderly and may be on fixed income. It also shows the extent to which the IRS is behind in processing certain matters, as there are millions of pieces of unopened mail scattered across the country at various IRS campuses. This mail certainly includes requests for collection due process hearings and requests for collection alternatives that should halt collection.

Andreozzi Bluestein has extensive experience representing clients in matters before the IRS and can help taxpayers navigate and respond to the notices that many are receiving during this confusing time. Should you or a client receive such a notice, please call us at any time for a no-obligation consultation.

Disclaimer

This communication is for general informational purposes only which may or may not reflect the most current developments. It is not intended to constitute legal advice or a recommended course of action in any given situation. This communication is not intended to be, and should not be, relied upon by the recipient in making decision of a legal nature with respect to the issues discussed herein. The recipient is encouraged to consult an independent licensed attorney before making any decision or taking any action concerning the matters in this communication. This communication does not create an attorney-client relationship between Andreozzi Bluestein LLP and the recipient.

Any links to other web sites are not intended to be referrals or endorsements of these sites. The links provided are maintained by the respective organizations, and they are solely responsible for the content of their own sites.

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