IRS Coronavirus Update

Todd S. Unger, Esq. LLC Providing Video and Teleconferencing

Much to my surprise, the IRS Collections and Examination Unit are functioning. IRS employees are not permitted to meet with taxpayers face- to -face because of social distancing mandates, but they’re still collecting and examining.
IRS Coronavirus Update
In conversations that I have had this week with Revenue Officers, local IRS employees in charge of collection, they are relaxing deadlines, but still enforcing on a case by case basis. Therefore, investigations are ongoing, but the government is permitting longer deadlines for document requests. Revenue Officers have informed me that the IRS can levy, but it’s on a case by case basis.

Tax audits are still being conducted but only by teleconference. Deadlines to appeal and file tax protests to the US Tax Court are not extended. Today, I spoke with an IRS auditor who stated new taxpayer audit letters are being generated.

During other disasters, such as Hurricane Sandy, the IRS has had a moratorium. If you wanted to resolve your case, you could; if not, then the IRS would leave you alone. The government is not following this protocol. This is crazy considering we are facing one of the biggest national challenges in our lifetime.

My tax clients are mostly small businesses and individuals, many of whom, are dealing with the realities of this new world. I have clients in the restaurant, event planning, and transportation business whose revenue stopped. My individual clients have suffered layoffs and, like most of us, are quarantined.

On a positive note, although I have not verified this, Bloomberg News reported that the IRS Automated Collection Agency (ACS) is stopping some enforcement action with regard to levies and collection notices in response to the Covid-19 outbreak. ACS is the IRS internal collection agency that deals with smaller cases ($250,000 of back taxes or less). The report stated that ACS is releasing all levies including social security garnishments.

I believe that the IRS and state taxing authorities will close. Regardless, my advice is to respond to all deadlines to preserve your due process rights when the taxing authorities resume full scale operations.

Do I still have to file and pay taxes on April 15th, 2020?

No. The President issued an Emergency Declaration in response to the Coronavirus Disease (COVID-19) on March 13th, 2020. He instructed the Secretary of the Treasury “to provide relief from tax deadlines to Americans. The relief changed the following tax deadlines:

The tax filing deadline has extended from April 15th, 2020 to July 15th, 2020.
The due date for making Federal income tax payments due April 15, 2020 is postponed to July 15, 2020.

The postponed tax payment is up to $1,000,000 for single individuals and married filing joint taxpayers. This payment relief also applies to the 1st Quarter Estimated Tax payment deadline.

This means that there are no tax penalties and tax interest if you file and pay by July 15th, 2020.

If you cannot file, by the deadline, you should file an extension which would provide you with six extra months to file. Although an extension of time to file is not an extension of time to pay beyond the July 15th, 2020 deadline, you would have until October 15th, 2020 to file your 2019 income tax return. Filing by October 15th 2020, would circumvent the onerous failure to file penalty (25% of the tax owed) even if you cannot pay by July 15th, 2020.