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Individual Tax

IRS Makes it Easier to Set Up Tax Payment Arrangements

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

In a News Release, IRS has announced a number of changes designed to help struggling taxpayers impacted by COVID-19 more easily settle their tax debts with IRS.

Payment arrangement changes.

IRS has announced the following changes.

Short-term payment plans.  IRS offers options for short-term and long-term payment plans, including Installment Agreements via the Online Payment Agreement system. In general, this service is available to individuals who owe $50,000 or less in combined income tax, penalties and interest or businesses that owe $25,000 or less combined that have filed all tax returns. The short-term payment plans are now able to be extended from 120 to 180 days for certain taxpayers.

Installment agreements.  Installment Agreement options are available for taxpayers who cannot full pay their balance but can pay their balance over time. IRS expanded Installment Agreement options to remove the requirement for financial statements and substantiation in more circumstances for balances owed up to $250,000 if the 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 IRS.

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.

Temporarily delaying collection. Taxpayers can contact IRS to request a temporary delay of the collection process. If IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer’s financial condition improves.

Offers in compromise. Certain taxpayers qualify to settle their tax bill for less than the amount they owe by submitting an Offer in Compromise. To help determine eligibility, taxpayers should use the Offer in Compromise Pre-Qualifier tool. Now, IRS is offering additional flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted offer in compromise.

Relief from penalties. IRS is highlighting reasonable cause assistance available for taxpayers with failure to file, pay, and deposit penalties. First-time penalty abatement relief is also available for the first time a taxpayer is subject to one or more of these tax penalties.

Taxpayer actions regarding tax payment relief.

All taxpayers can access additional information on IRS.gov. Many taxpayers requesting payment plans, including Installment Agreements, can apply through IRS.gov without ever having to talk to a representative.

Other requests, including this new relief, can be made by contacting the number on the taxpayer’s notice or responding in writing. However, to request relief, IRS reminds taxpayers they must be responsive when they receive a balance due notice.

To continue your research on offers in compromise, see FTC 2d/FIN ¶T-9601.

 

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