IRS Expands Tax Debt Relief Programs

IRS Expands Tax Debt Relief Programs

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The IRS recently introduced the Taxpayer Relief Initiative, a new program aimed at assisting taxpayers who are struggling to pay their taxes due to the pandemic.

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While taxpayers who owe taxes have traditionally had options like installment agreements and offers in compromise, they now have even more choices. (IRC-2020-248)

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Here are the key features of the Taxpayer Relief Initiative according to the IRS:

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- Taxpayers who qualify for a short-term payment plan option can now have up to 180 days to settle their tax liabilities, an extension from the usual 120 days.

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- The IRS will offer increased flexibility for taxpayers who are temporarily unable to meet the payment terms of an accepted offer in compromise.

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- The IRS will automatically add certain new tax balances to existing installment agreements for individuals and business taxpayers who have ceased operations, preventing them from defaulting on their agreements.

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- Certain qualified individual taxpayers who owe less than $250,000 can set up installment agreements without needing to provide a financial statement or substantiation if their monthly payment proposal is adequate.

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- Some individual taxpayers who owe only 2023 taxes and less than $250,000 may qualify to establish an installment agreement without the IRS filing a Notice of Federal Tax Lien.

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- Qualified taxpayers with existing direct debit installment agreements may now use the online payment agreement system to propose lower monthly payment amounts and change their payment due dates.

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- Taxpayers who cannot pay can contact the IRS to request a temporary halt in collection efforts, which the IRS will grant if the taxpayer is currently unable to pay.

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Navigating these various guidelines can be confusing, and IRS instructions are often difficult to understand. While there are fees associated with hiring a tax professional, it may save you both money and time.

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“When you’re dealing with the IRS, it’s almost always worth it to get professional help from a tax attorney or enrolled agent. The same exact case and be accepted or denied by different IRS examiners — it’s all in the presentation,” said Michael McKeon, CEO of SoNerdly, a financial services comparison website for consumers.