Update 12/2
The IRS has made several additions to the Taxpayer Relief Initiative since the original publishing of this article, giving you even more flexibility as you head into the new year. Here’s what you need to know:
- Individual taxpayers owing up to $250,000 for tax year 2019 only can now set up your installment agreement with no lien filed.
- Individual taxpayers or out-of-business entities can automatically include new tax year balances into existing installment agreements.
If you have any questions about the Taxpayer Relief Initiative, give us a call at 303-317-6111. We’re always happy to help!
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The IRS just announced major changes to its collections process, a development that couldn’t come soon enough for taxpayers. The new Taxpayer Relief Initiative offers necessary flexibility and breathing room to those negatively affected by COVID-19.
The bombshell announcement marks the biggest change to IRS Collections policy since the launch of the Fresh Start Initiative in 2011. Because Boxelder negotiates directly with the IRS every day on behalf of clients, we knew from our talks with revenue officers that big changes were coming. With that knowledge, we’ve already put these policy changes into effect to find meaningful tax relief for our clients. Here’s how:
Extended Payment Deadlines: A Little Breathing Room Goes a Long Way
A new client came to us in dire straits. He’d recently been discharged from bankruptcy after a judge had approved a repayment plan. All our client needed was for the bankruptcy trustee to send the checks out to the creditors, but the IRS demanded he pay his debt in just 60 days. He needed more time for the bankruptcy check to clear.
Thanks to the new IRS collections policy, we were able to extend our client’s payment deadline from 60 days to six months. That gave his bankruptcy trustee enough time to send the check to the IRS, and all his debt was absolved.
If you could use a little breathing room from the IRS, the new collections policy will allow that, and you don’t need to be going bankrupt to qualify for meaningful relief. Any taxpayer that qualifies for a short-term payment plan can now extend their tax deadline from 120 days to 180 days.
If that sounds like time you could use, then let Boxelder negotiate with the IRS on your behalf.
Increased Flexibility for Installment Agreements
The Taxpayer Relief Initiative also changed how the IRS calculates your monthly rates for Installment Agreements.
Under the old policy, taxpayers with over $100,000 in debt turned in their financials to the IRS, and the IRS used them to calculate their monthly rate. The new policy offers opportunities for high-income taxpayers to significantly lower their monthly payments as long as they owe less than $250,000, with no need to submit financials.
One of our clients qualified for this opportunity and really needed it. Though her financials indicated that she could afford a much higher monthly payment, business losses from COVID-19 had her strapped for cash. She also had her daughter’s college tuition to pay. So, she came to us for help negotiating a lower monthly payment amount.
We managed to negotiate her monthly rate down from $3,500 to $1,500 per month, and it made all the difference. These types of payment reductions to monthly installment agreements can be extended all the way to the taxpayer’s Collections Statute Expiration Date (CSED). This is the final date that the IRS can legally hold you responsible for your tax debt.
But most taxpayers just need some flexibility and can return to higher payments when they’re ready. In this case, our client will move to a more aggressive payment plan once her daughter graduates from college next spring.
Your PPP Money is Still Safe
Another client of ours owned a radio station and had fallen behind on his payroll tax. The IRS levied him, and he called us before the 21-day deadline. We immediately determined that the IRS had no right to levy: our client still had $50,000 in Paycheck Protection Program (PPP) money.
If you received a PPP loan from the government, and you spent the money under the proper guidelines, then you qualify for PPP Loan Forgiveness. Because of this, we were able to get our client’s tax levy released, and he was able to use the funds in his account to pay employees and other expenses for the business. In short, he kept operating and stayed in business because of Boxelder’s help.
More Benefits to Come
This was the biggest overhaul to the IRS’s collection policies in a decade, but there are still more changes to come. With a new administration set to take over, and an even bigger recession looming, the IRS may already be working on the next batch of relief options. When these changes come, Boxelder will be the first to know, and we’ll do everything in our power to help you benefit.
If you’re feeling overwhelmed by your tax burden and don’t know where to start, you’re not alone. We’ve helped many clients in a similar situation. Give us a call at 303-317-6111 for a free consultation, no strings attached. Boxelder does not employ sales people. Speak to a licensed professional today.
