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Posted On January 19, 2021
Tax Debt? The Taxpayer Relief Initiative May Help

Tax Debt? The Taxpayer Relief Initiative May Help

The Internal Revenue Service has recently introduced the Taxpayer Relief Initiative to help assist people and businesses struggling to pay their tax bills because of COVID-19. Nevada and other states across the U.S. have precautions and restrictions in place due to the coronavirus pandemic, many of which have left people out of work, with substantially reduced hours, or have caused businesses to shut their doors. The newly introduced initiative extends additional options to those individuals owing tax debts that are unable to pay.

Help for Struggling Taxpayers

Recognizing the impact COVID-19 has had on people, families, and businesses, the IRS implemented the Taxpayer Relief Initiative with the purpose of continuing to help taxpayers wherever possible. The primary goals of the initiative include providing broad-based relief to taxpayers for unpaid liabilities resulting from IRS mail processing issues, correspondence delays, and other coronavirus-related issues. The initiative also aims to extend relief options to all taxpayers impacted by the pandemic while still upholding the country’s tax laws and addressing cases of glaring noncompliance.  

Revised COVID-related Collection Procedures

The Taxpayer Relief Initiative extends several benefits to individual taxpayers and businesses struggling to pay tax bills. Among these benefits are the following:

  • Extending flexibility to taxpayers unable to fulfill the terms of an agreed-upon offer in compromise
  • Extending the time to resolve debts from 120 to 180 days for taxpayers qualifying for short-term payment plans
  • Automatically adding certain newly acquired tax balances to existing installment agreements
  • Allowing taxpayers owing less than $250,000 only for the 2019 tax year to set up installment agreements without notices of federal tax liens
  • Allowing qualified individual filers owing less than $250,000 to establish installment agreements without financial statements or proposal substantiations

Through the initiative, qualifying taxpayers who already have direct debt installment agreements in place may use the online payment agreement system to change the dates of their payments or to propose agreements for lowered monthly payment amounts.

Reasonable Cause and Abatement

In addition to the tax debt payment options and flexibilities, the IRS’ recent initiative also offers some reasonable-cause relief from penalties for taxpayers. For example, the IRS may not levy failure-to-file, failure-to-pay, or failure-to-deposit penalties against certain taxpayers. Further, the IRS may offer relief to qualifying taxpayers the first time they face abatement penalties.