Many New Yorkers are in a tough spot right now. As the recent pandemic has shut down businesses across the state, people and businesses are facing an economic downturn they didn’t expect.
And for those dealing with tax issues, this time can be especially stressful. But in response to recent events, the IRS is working to provide relief by expanding the tax filing deadline by 90 days and temporarily altering its practices from April 1 through July 15, 2020.
What changes is the IRS offering?
Under it’s People First Initiative, the IRS is providing relief for people and businesses during this uncertain economic climate. Two of the biggest adjustments the IRS is making have to do with Installment Agreements and Offer in Compromise (OIC) payments.
Some agreements suspended
Under temporary provisions, taxpayers in existing Installment Agreements can suspend payments between April 1 and July 15, 2020. This means the IRS won’t renege on any Installment Agreements in this timeframe. However, interest on existing Installment Agreements can still accumulate during this period.
Those who recently entered an Installment Agreement also have assistance. If New Yorkers can’t do anything about their federal tax liabilities, they have options. They can work with the IRS to negotiate a monthly payment plan that works with their financial situation.
Adjustments to OIC process
People sometimes use an OIC when times are tough, as this settlement can let people negotiate a reduced tax bill. To assist taxpayers during this period of uncertainty, the IRS has made some adjustments to its OIC filing process:
- Extended information requests: Taxpayers can further support their OIC claim by providing the IRS additional information until the filing deadline. The IRS also states it won’t close pending requests before the deadline without receiving confirmation from the taxpayer.
- Temporary payment suspensions: Under the recent changes, taxpayers can suspend payments on accepted OICs until the filing deadline. However, any unpaid balances they have will still accrue interest.
While it offers these benefits for 2019 taxes, the IRS won’t “default an OIC” for those who still owe 2018 taxes. If that’s the case, people must submit those taxes by the July 15, 2020 deadline.
The IRS shows no mercy when going after people’s hard-earned money. But these new rules could offer leeway for many New Yorkers, allowing them to get their financial lives back in order. But like any situation involving the IRS, things aren’t always clear cut. Because of this, the guidance from an experienced tax law attorney could be beneficial.