Taxpayer Relief Beyond 2019 Income Tax Return Filing and Payment Extensions

The impact of COVID-19 on many aspects of our daily lives has been unprecedented (an overused word these days). One of the key areas we have been hearing from clients and other practitioners is relief from the Internal Revenue Service regarding audits, collections, and other administrative matters. Initially, relief was granted for the payment of 2019 income taxes by extending the due date from April 15, 2020 to July 15, 2020. A few days later, IRS extended the filing due date to July 15, 2020 as well. However, many taxpayers whose businesses have closed, or lost their jobs, or are suffering significant cash flow issues, were not provided any universal relief. Extension requests and other relief had to be requested on a case-by-case basis.

On March 25, 2020, IRS released Information Release 2020-59, denominated the “People First Initiative.” In this Release, IRS announced several extensions of time for taxpayers dealing with a variety of different issues pending:

• Payments due under an active installment agreement due between April 1 and July 15 are suspended. If a taxpayer is unable to comply with an existing installment agreement under a direct payment arrangement can suspend those payments as well. However, interest and applicable penalties will continue to accrue.
• Taxpayers with outstanding liabilities and working on getting an installment agreement should continue those efforts during this time frame.
• With respect to offers in compromise:
  • The due date for any required response to a request for information is extended to July 15, 2020.
  • Payments due under an accepted offer can be suspended to July 15, 2020, but interest will continue to accrue on the unpaid balance.
  • Taxpayers who might be eligible to submit an offer should continue to do so in the normal course.
  • Taxpayers who have not yet filed their 2018 or 2019 income tax returns should do so no later than July 15, 2020.
• Taxpayers who have not filed income tax returns for years prior to 2019, and have credits pending, are encouraged to do so before the applicable three-year statute of limitations expires. There is no extension of time to file those delinquent returns and be able to receive a refund. Currently, 2016 income tax returns that have not yet been filed have until April 15, 2020 to be filed and receive a refund of any over-payment for that year.
• IRS is suspending audit and collection contacts until July 15, 2020.
• Any case in automated collections status will not have a lien recorded or levy issued until July 15, 2020.
• IRS will not allow any pending assessment or collection statute of limitations to expire. Where applicable, IRS will take all necessary action to protect such statutes, including the issuance of a notice of deficiency, and the commencement of legal proceedings to reduce a tax lien to judgment. IR 2020-59 is silent as to whether IRS will seek a written extension of any applicable statute of limitations.
• IRS is suspending all in-person meetings through July 15, 2020. Meetings can still be held through remote means, including by telephone, WebEx, etc.

On the whole, these remedial actions have met with a favorable response. With the U.S. Tax Court cancelling all scheduled trial session thru July 3, 2020, there will likely be limited work on pending Tax Court cases. Nevertheless, neither IRS nor the Tax Court has the statutory authority to suspend the filing due date for a petition, so anyone who has received a notice of deficiency, notice of determination, or any other notice initiating Tax Court jurisdiction, MUST file the petition by the due date. Since mail delivery to the Tax Court is being held until the Court re-opens, it is imperative that the petition be mailed using certified mail, return receipt requested, or any authorized mail delivery service that can establish affirmatively the date of mailing.

Buchanan’s tax attorneys remain available to assist with all matters pending before the IRS. We look forward to being able to assist during this profoundly difficult time period.