December 9, 2020 10:38 pm

New Initiative for Handling Taxpayer Debt

Unfortunately, the pandemic has caused some taxpayers to be unable to pay their taxes. The IRS announced a Taxpayer Relief Initiative to help these taxpayers get caught up (IR-2020-248). Some of the key points of this new program include:

  • Taxpayers who qualify for a short-term payment plan option may now have up to 180 days to resolve their tax liabilities (previously it was 120 days).
  • The IRS is offering flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted Offer in Compromise (OIC).
  • The IRS will automatically add certain new tax balances to existing installment agreements for individual and out-of-business taxpayers to help avoid defaults on agreements.
  • Certain qualified individual taxpayers who owe less than $250,000 may set up installment agreements without providing a financial statement or substantiation if their 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 the 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.

This new program is in addition to the option of first-time penalty abatement relief. However, this relief does not apply to the failure-to-pay penalty, which continues to accrue until the tax is paid in full.

Taxpayers who want to obtain a payment plan or other relief should go to https://www.irs.gov/payments.

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Tax Glossary

Joint return

A return filed by a married couple reporting their combined income and deductions. Joint return status provides tax savings to many couples.

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