Are you struggling to pay your back taxes? There a few packages offered by IRS that may help alleviate your tax burden due to the pandemic.
The Internal Revenue Service (IRS) is making some changes in its collection program. This is for reducing all burdens on taxpayers who have an obligation of outstanding tax debts and are trying to deal with the financial impact of the Covid-19 outbreak.
On 2nd November 2020, the IRS declared an extended relief package for all taxpayers who are trying hard for paying their tax bills. This new relief package is named TRI (Taxpayers Relief Initiative). The TRI is the further step in offering more relief and choices to taxpayers who are encountering economic hardships as an outcome of the Coronavirus pandemic.
Today, there are more than 20 million taxpayers, including specialty, business, and individual taxpayers. They owe the IRS back tax debt. Earlier in March 2020, the IRS declared the PFI (People First Initiative). This initiative was for suspending IRS collection efforts on several tax debtors. And now the all-new TRI will offer much required extra temporary relief for several taxpayers who are bound to pay the IRS back taxes.
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Prime Tax Relief Initiatives by IRS During COVID-19 Pandemic
Here are the main changes made by the new Taxpayer Relief Initiative of IRS during the COVID-19 outbreak:
1. Less Paperwork for Installment Agreements
Putting together installment agreements may need lots of documentation. Currently, the IRS declares that some qualified individual taxpayers who are bound to pay less than $250,000 may build them up without offering a financial proof or statement in case their monthly payment proposal is enough.
2. Extensions of Payment Plan
Today, the IRS provides both long-term and short-term payment plans. These incorporate installment agreements that you can apply for online. Usually, digital applications are accessible to taxpayers who are obliged to pay $50,000 or less alongside interest, penalties, and income tax or businesses that are obliged to pay $25,000 or less along with all filed tax returns.
Even if you owe more than the aforesaid amounts, you can still enter into an agreement. However, you will require talking to somebody over the phone. The short-term payment plans do not cost you, but for setting them you need to pay in full in 120 days. Under the new TRI by IRS, its deadline will be maximized to 180 days for specific taxpayers.
3. Automatically Added Tax Liabilities
Now the IRS will also add some tax balances automatically to current installment agreements for individual taxpayers and out of business taxpayers. In case you do not pay your taxes along with new balances, you can put your installment agreement at risk.
When you can hardly keep your head above water, it can be difficult for keeping track. Hence, by adding these new tax balances to the mix, the IRS states that this taxpayer-friendly method will help some taxpayers abstain from default.
4. No Tax Lien Notice Important for Some Installment Agreements
When it comes to Internal Revenue Service and installment agreements, the process is basically necessitous. At the moment, a few individual taxpayers who are obliged to pay less than $250,000 and who are just bound to pay for the 2019 tax year may qualify to establish an installment agreement with no notice of federal tax lien that the IRS filed.
5. Additional Flexibility for Offers in Compromise
An OIC (Offer in Compromise) helps you fix your tax debt for less than the complete amount you are obliged to pay. The IRS ponders a bunch of circumstances incorporating the capacity of paying, asset equity, expenses, and income. Usually, the IRS will just agree to an Offer in Compromise in case they decide they will be unable to gather the due amount within a fair time period. This choice must not be your first option.
Although you can apply for an Offer in Compromise by yourself, ponder a tax expert. Nevertheless, in case you choose to try it on your own, utilize the Pre-Qualifier Online Tool of IRS for seeing whether you qualify and for measuring a preliminary offer amount. For taxpayers with current OICs who cannot fulfill the payment terms temporarily, the IRS states it will be providing more flexibility.
6. Online Chances for Making Changes
If you have a current installment agreement, you basically require talking to the IRS for making changes. Today, qualified taxpayers with installment agreements paid by direct debit can make online changes, incorporating suggesting lower monthly payment amounts and changing the due dates of their payment.
7. Fair Cause Relief from Penalties
In case you have fair cause for being a failure in the filing, paying, and depositing timely, you may be qualified for the penalty relief. Those reasons incorporate incapacitation, serious sickness, and death, inability to get records, natural disasters, or inevitable absence impacting you or your family. Not getting sufficient money is usually not adequate to qualify by yourself. For taxpayers, first-time penalty abatement relief is also available.
8. Temporary Delays in Collection
The IRS can also delay collections temporarily; however, you need to ask. This basically occurs by marking your account as ‘presently not collectible’. But be cautious: being presently not collectible does not imply the debt goes away. It implies that the IRS has decided you can’t afford to pay the debt presently.
Further Steps for Taxpayers
For a taxpayer who is obliged to the IRS, the first step is to not neglect their balance. According to the IRS’ declaration, they will be conveying payment reminder notices to a few balance due filers in early November 2020. Hence, doing nothing can cause IRS collection enforcement (passport, levies, and liens limitations).
Darren Guillot, the IRS Small Business/Self-Employed Deputy Commissioner for Collection and Operations Support, said they want individuals to know their IRS staff members are committed to continuing supporting taxpayers always, incorporating providing several choices for people struggling for paying their tax bills.
So, if you are a taxpayer, you should contact the IRS or your tax professional, learn the choices available, and choose the best-suited option for you. After all, the all-new TRI has opened additional choices for taxpayers who are struggling for paying the IRS.