IRS to Start Collecting Overdue Tax Payments

Posted by Jeffrey Siegel on July 9, 2020

The Internal Revenue Service reminded taxpayers Wednesday that they will need to resume paying their taxes on July 15 as its “People First Initiative” to provide tax and penalty relief in response to the novel coronavirus pandemic comes to a close. July 15 is also the date, of course, when taxpayers will be expected to file their tax returns in this lengthened tax season, unless they file for an extension.

  • Penalty relief: Currently, taxpayers who fail to file a return or fail to pay an amount shown as tax on the return on or before its due date are subject to a penalty.
  • Installment agreements: Currently, taxpayers who can’t pay the full amount of tax due in one payment may enter into an agreement with the IRS to pay any tax due in installments.
  • Delay in IRS collections: Currently, if taxpayers don’t pay their tax obligation in full at the time it is due, they generally will receive a series of escalating automated notices reminding them of the amount owed, including any penalties and interest accrued, and demanding payment. These notices precede the automated collection process, which continues until the account is satisfied, the case is transferred to a revenue officer or until the IRS is no longer able to legally collect the tax.

IRS People First Initiative ending

The IRS reminded taxpayers who took advantage of the People First Initiative tax relief and didn’t make their previously owed tax payments between March 25 to July 15 that they need to restart their payments.  As the IRS continues to reopen its operations across the country, taxpayers who were in payment agreements and skipped any payments from March 25 and July 15 should start paying again to avoid penalties and possible default on their agreements, according to the agency.

“Through the People First Initiative, we have endeavored to provide unprecedented relief to help those who owed federal taxes and allow them extra time,” said IRS commissioner Chuck Rettig in a statement Wednesday. “As we resume a phased-in approach to our normal operations, we are sympathetic to the many Americans still suffering COVID-related hardships and stand ready to continue offering help to those who need it.”

Here’s what taxpayers should do to resume their payment agreements to the IRS, including installment agreements, offers in compromise, and Private Debt Collection program payments:

Installment agreements: Taxpayers who suspended their installment agreement payments between April 1 and July 15, 2020, will need to resume their payments by their first monthly payment due date after July 15. Taxpayers should be aware that the IRS didn’t default their agreement, but interest did accrue, and the balance remained.  Taxpayers who had their bank suspend direct debit payments should contact the bank immediately to ensure their first monthly payment due date occurring on or after July 15, 2020 is sent to avoid penalties. If a taxpayer can’t meet their current installment agreement terms due to a COVID related hardship, they can revise the agreement on the IRS website or call the customer service number on their IRS notice if they have a direct debit installment agreement.

Offers in compromise: For pending offers, if the IRS is currently reviewing a taxpayer’s submitted offer but hasn’t accepted it yet, the taxpayer should resume their required payments starting July 15, 2020. The IRS will amend the taxpayer’s offer to allow them to pay any skipped payments at the end of the offer period, if the offer is accepted.

If a taxpayer has an already-accepted offer in compromise agreement, and the taxpayer was unable to make the payments on their accepted offer because of a COVID-19 hardship, the taxpayer should resume payments and make up the missed payments by July 15, 2020. If the taxpayer is unable to make up the missed payments, they can contact the number on the IRS notice to discuss their situation.

Private debt collection: The IRS did not forward new delinquent accounts to private collection agencies from April 1 through July 15, 2020, and collection agency interaction with taxpayers was limited to inbound telephone calls unless requested by a taxpayer in a voicemail or correspondence.

Taxpayers who had their PCA payments on hold should resume payments by July 15. The IRS encourages taxpayers to work with their assigned PCA to establish a new payment arrangement or restructure an existing one based on their current situation.

Taxpayers who owe but can’t pay. The IRS reminds taxpayers who are experiencing a hardship or who have questions about their payments to call the customer service number provided on their notice but be mindful that wait times could be long. Phone lines remain extremely busy as the IRS resumes operations. Taxpayers also have a variety of options through the IRS website to make one time or recurring payments without having to contact the IRS.

Need back tax help in Kansas City?  Bank account levied in Kansas City?  Paycheck garnished in Kansas City?  Lien on business or home in Kansas City? If you or a client need help fighting off the IRS, call Jeffrey R. Siegel, your Kansas City tax attorney.  We help with IRS liens, wage garnishments, levies, offers in compromise, innocent spouse relief, federal employment tax, Trust Fund Recovery Penalty and installment agreements.  Bring back some stability to your life, and call (913) 735-4829.