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IRS reveals new relief for struggling US taxpayers - here’s what’s been announced

IRS reveals new relief for struggling US taxpayers - here’s what’s been announced
(Image credit: Getty)

New measures aimed at helping American taxpayers who are struggling to settle their tax debts amid the backdrop of the coronavirus pandemic have been announced by the Internal Revenue Service (IRS). 

Expanded options for making payments and alternatives to resolving any balances owed are among the main steps that have been introduced to help taxpayers meet their obligations to the IRS. The moves are the latest concessions that the service has had to make to help alleviate the pressures being created by the pandemic. Earlier this year, the IRS extended the tax deadline by three months to give taxpayers affected by the COVID-19 disruption more time to employ the best tax software and file their taxes. 

"We want people to know our IRS employees are committed to continue helping taxpayers wherever possible, including offering many options for those struggling to pay their tax bills," said Darren Guillot, the IRS Small Business/Self-Employed Deputy Commissioner for Collection and Operations Support. 

IRS reveals new relief for struggling US taxpayers - here’s what’s been announced

(Image credit: Getty)

New relief for taxpayers

Although assistance has always been available to taxpayers who owe taxes, the new IRS Taxpayer Relief Initiative is expanding on those existing plans and tools further. In particular, the revised procedures will be helpful to taxpayers who have a record of filing their returns and paying their taxes on time. Here are some of the new measures that have been introduced: 

  • Those who qualify for a short-term payment plan option now have up to 180 days to resolve their tax liabilities instead of 120 days.
  • New flexibility for certain taxpayers who are temporarily unable to meet the payment terms of an accepted Offer in Compromise.
  • The automatic addition of certain new tax balances to existing Installment Agreements, instead of defaulting the agreement. 
  • Allowing certain individual taxpayers who owe less than $250,000 to set up Installment Agreements without providing a financial statement or substantiation if their monthly payment proposal is sufficient. 
  • Allowing some individual taxpayers who only owe for the 2019 tax year and less than $250,000 to set up an Installment Agreement without a notice of federal tax lien filed by the IRS.
  • Giving qualified taxpayers with existing Direct Debit Installment Agreements the option to lower monthly payment amounts and change their payment due dates using the Online Payment Agreement system.

Additional details on the relief initiative

With the finances of millions of Americans being stretched like never before by the fallout from the pandemic, the hope is that the new measures will help people avoid having to take out one of the best personal loans online to cover what they owe, and steer them away from payday loans too. Among the tools introduced by the IRS to assist taxpayers who owe taxes are:

Temporarily delaying collection
By contacting the IRS to request a temporary delay of the collection process, taxpayers who are unable to pay may be provided extra time until hopefully their financial situation improves.

Offer in compromise
Where taxpayers have previously qualified for an offer in compromise, and so are permitted to settle their tax bill for less than the amount they owe, additional flexibility is now being offered for those who are temporarily unable to meet the payment terms of their agreement. 

IRS reveals new relief for struggling US taxpayers - here’s what’s been announced

(Image credit: Pixabay)

Relief from penalties
Reasonable cause assistance - whereby the IRS might forgive indiscretions if “sound reasons” can be provided - is being highlighted for taxpayers who have been hit with failure to file, pay and deposit penalties. There is also a reminder that if a taxpayer is subject to one or more of these tax penalties for the first time, first-time penalty abatement relief is also available. 

"If you're having a tax issue, don't go silent. Please don't ignore the notice arriving in your mailbox," Guillot said. "These problems don't get better with time. We understand tax issues and know that dealing with the IRS can be intimidating, but our employees really are here to help."

Help with debt problems

If you’re not only struggling to meet your tax obligations, but are sinking under the weight of debt too, the same “don’t go silent” advice also applies. The household incomes of many have been impacted by recent events, and debt is a major concern at present. In the first instance, see whether loved ones might have a way of helping, even if it’s just for a short while to see if you can get yourself back on an even keel. Also discuss your situation with the best mortgage lenders, loan providers, and credit card issuers to see if they can help in any way too - many of them can and will. 

And should you have significant debts that you fear are getting out of control, you could talk to a debt counselor or seek advice from the best debt consolidation companies on how they could help you to better manage everything that you owe. 

With over 20 years’ experience in the financial services industry, Tim has spent most of his career working for a financial data firm, where he was Online Editor of the consumer-facing Moneyfacts site, and regularly penned articles for the financial advice publication Investment Life and Pensions Moneyfacts. As a result, he has an excellent knowledge of almost areas of personal finance and, in particular, the retirement, investment, protection, mortgage and savings sectors.