Riding on the winds of the COVID-19 pandemic is a current of uncertainty. Will our families stay healthy? Will we have a job to come back to when the virus recedes into the shadows from which it came? Although many taxpayers will receive an economic stimulus payment to help ease the financial burdens borne out of the pandemic, this relief may not be enough to make ends meet. When it comes to paying federal income taxes, other help is needed. Thankfully, for those who owe federal income taxes on their 2019 individual income tax return or are on the hook with Uncle Sam for prior tax years, help has arrived.
The IRS is giving taxpayers until July 15, 2020, to file and pay their 2019 federal income tax without incurring penalties and interest. For those who have not yet filed their 2019 federal income tax returns and anticipate owing tax, this reprieve should bring a sigh of relief. Many states have conformed to the IRS’s extended 2019 filing and tax payment date. To check if your state has conformed, please refer to your state’s income tax website. If you filed your 2019 federal return and have not yet paid the tax due, you have until July 15, 2020, to pay the balance due without incurring penalties and interest. Come July 15, if you still do not have enough quarters in the kitty to pay the balance due on your 2019 federal income tax return, the IRS has several payment options available, including postponing payment to a later date. Keep in mind that penalties and interest will begin to accrue on any 2019 income taxes not paid by July 15, 2020, even if a payment arrangement is made with the IRS.
What about those who are already in a payment agreement with the IRS, and cannot continue to make the payments because of the COVID-19 pandemic? Help is available for these folks too. On March 25, 2020, the IRS launched the People First Initiative, a comprehensive plan directed to assist taxpayers who owe federal taxes. Taxpayers who are already in an installment agreement with the IRS may suspend any payments due between April 1 and July 15, 2020. This is true even if your payments are scheduled to be directly debited out of your bank account. Taxpayers can temporarily suspend their automatic installment agreement debit payments by contacting their bank directly. Suspending payments between April 1 and July 15, 2020, will not cause the installment agreement to go into default. However, to keep your installment agreement from going into default, it is crucial to reinstate the direct debits with your bank at least two weeks before your next scheduled payment after July 15, 2020. Keeping your installment agreement out of default may save taxpayers a reinstatement fee. The IRS has stated on their website that they will not default any current installment agreements for lack of payment during this period.
In addition to suspending installment agreement payments, the IRS is allowing taxpayers in an accepted offer in compromise to defer making any payments scheduled between April 1 and July 15, 2020, without fear of voiding the accepted offer. There is no doubt about it, this is one of the most uncertain times many of us will ever face. However, amid the uncertainty, there is hope. If you owe the IRS, you are not alone. Our compassionate experts at TaxAudit’s Tax Debt Relief Services are here to help you navigate the IRS collections system, so you can get the best resolution possible. The tax professionals at TaxAudit’s Tax Debt Relief Services understand that each taxpayer’s situation is unique. Because of this, we offer a no-obligation free phone consultation with one of our licensed tax professionals. Our services remain available during the COVID-19 pandemic, so please feel free to reach out today.