IRS and State Tax Collection Matters (with COVID19 Updates) as of May 1, 2020

I attended this Zoom meeting held by two attorneys/CPAs from Frost Tax Law and want to share the basic details. 

First, and most important in my mind, is when someone receives a notice from the government due to a tax matter IMMEDIATELY notifying your accountant/tax preparer. There will be numerous notices before liens/levies and other forms of collection-related matters begin; however, it is vital to be proactive and cooperate with the government. 

As for collection effort changes the IRS has made temporarily (until July 15th 2020) due to the current shutdown of the economy:

·        Field Collection (when they coming knocking on your door) is still moving forward for high-income ($100,000.00 and over) non-filers, but others are suspended

·        Trust Fund Recovery Penalties (has to do with unpaid payroll tax payments) is ongoing

·        Automated liens and levies are suspended for now

·        Passport no new certifications is ongoing

·        No new cases are being sent to private debt collections at this time

·        No new audits but existing ones can move forward in the process

·        Office of Appeals is ongoing over phone

·        IRS is looking to protect the statute of limitations

·        Earned Income Credit verification is extended to 7/15/20 to provide documentation

There could be possible extensions

As for Installment Agreements:

No payments are required 4/1-7/15/20, but interest still accrues

The IRS will not terminate automatic draws from checking accounts. Taxpayers must contact bank for stop payment (allow two weeks)

Contact employer to defer payroll reduction payments

Offer in Compromise – July 15th deadline for provide any requested information and closing of any pending offer without taxpayer consent. All payments can be delayed until that time as well.

The State of Maryland will not be sending out any lien warning notices, issuing liens, attaching bank accounts or holding up renewal of licenses during this time

A great deal of discussion on assessing liability, methods the IRS will utilize to collect a debt (property liens, bank levies, wage levies, passport revocation, etc.  Some exemptions apply) and the steps to take to work with the IRS through this process. This is a top priority of the government. They have delayed the past two years in assessing penalties, have outsourced collections and increased hiring for these purposes. Unpaid debts can lead to criminal and civil court cases.  Again, I repeat, once you receive the first notice, contact an accountant/tax preparer to assist with challenging liability, any possible relief from debt, completing necessary forms and assisting with dealing with the IRS agents.