Important IRS Changes: Tax Relief for Americans during the Pandemic
The IRS has announced tax deadline extensions along with their People First Initiative to help Americans with the relief they need during this COVID-19 pandemic.
“The IRS is taking extraordinary steps to help the people of our country,” IRS Commissioner Chuck Rettig said in the news release. “We are temporarily adjusting our processes to help people and businesses during these uncertain times. We are facing this together, and we want to be part of the solution to improve the lives of all people in our country.”
Keep reading for important IRS changes and how they may impact you.
Tax Return Deadline Extended
Due to COVID-19, the IRS has pushed back the tax deadline for individuals and businesses from April 15, 2020, to July 15, 2020.
According to the IRS, “Taxpayers may also defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.”¹
You do not need to file a form or call the IRS to qualify for the automatic deadline and payment relief change, unless you plan on filing past the new July 15 deadline.
The deadline to file extended returns remains unchanged. Extended returns are due by Oct. 15, 2020.
Federal Income Tax Payments Deferred
If you owe federal income tax payments on your 2019 taxes, the IRS has extended the deadline to pay without penalties or interest. Typically due on April 15, 2020, payments are now due by July 15, 2020.
Estimated Taxes Deadline Extended
Typically, your Q1 2020 quarterly tax payment is due by April 15. Q2 estimated taxes are due June 15.
The IRS has extended the April 15, 2020, quarterly tax payment for those who are self-employed. However we encourage you, if you can, to go ahead and make payments.
Temporary Suspension of Installment Plan Payments
For those currently paying back the IRS on payment plans, the IRS announced the suspension of payments due between April 1 and July 15, 2020.
The IRS will not default any Installment Agreement during this period; however, interest will continue to accrue on unpaid balances.
If you have an Installment Agreement with the IRS and you can continue making payments, it would be wise to do so because interest is not being waived.
Liens and Levies Suspended
The IRS has suspended new automatic liens and levies during this period.
The agency also announced that field collection activities will be suspended from April 1 to July 15, 2020. This means any seizures of personal residences will also be suspended. However, the IRS notes, “field revenue officers will continue to pursue high-income non-filers and perform other similar activities where warranted.”
Offers in Compromise (OIC) Applications
The IRS is taking several steps to assist taxpayers who are currently petitioning the IRS to forgive some or all of their outstanding tax bill–otherwise known as the OIC process.
For pending OIC applications, taxpayers now have until July 15, 2020, to make their case for relief, and the IRS will not close requests before July 15 without the taxpayer’s consent. However, interest will continue to accrue on any unpaid balances.
401(k) Maneuver does not provide tax or legal advice. Please consult your tax or legal professional if you have questions regarding your specific situation.