Four Changes That May Affect How Much You Owe This Upcoming Tax Season
If COVID-19 has impacted your finances, filing your 2020 taxes may come with some surprises. Here's how to prepare...
COVID-19 has financially impacted many Americans. As part of the Taxpayer Relief Initiative, the IRS is making it easier for those with outstanding tax debts to set up payment agreements.
The IRS offers both short and long-term payment plans for qualifying taxpayers and offer plans through the Online Payment Agreement system. To qualify for a payment plan, you will need to fall into one of the following categories
Owe $50,000 or less in combined income tax penalties and interest as an individual
Be a business that owes $25,000 or less combined and be up to date with tax return filings.
For taxpayers already on a short-term payment plan, those plans can now be extended from 120 to 180 days. Additionally, for those who owe less than $250,000 combined, the IRS is now accepting installment agreements without proof of financial statements. Procedures for installment agreements have been modified to limit the requirements for a federal tax lien determination for those who only owe outstanding taxes for last year.
Furthermore, the IRS is now allowing taxpayers to contact them to ask for a temporary delay in the collection process. The IRS will delay the collection until the taxpayer’s financial condition improves.
While the IRS is usually known for being very strict with debt collection, they offer more flexibility this year due to the pandemic. Taxpayers can visit IRS.gov to apply for installment agreements. To take advantage of the new payment plans offered, taxpayers should call the number on their notice or respond in writing.
To offer payment flexibility, the IRS requires taxpayers to be responsive when they receive notices. Never ignore an IRS letter. Although dealing with the IRS can be intimidating and confusing, the IRS is more willing to help taxpayers who acknowledge their notices promptly.
If you receive a notice from the IRS and have your returns filed by an accountant, your accountant may be able to help you with contacting the IRS. If you did not have an accountant file your tax return and don’t know what to do next to settle your notice, submit a consultation request with Taxfyle at Taxfyle.com
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