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More flexibility for taxpayers with tax debts amid coronavirus

Under the new Taxpayer Relief Initiative, the IRS is offering several new forms of relief:

  • Taxpayers who qualify for a short-term payment plan option now have up to 180 days to resolve their tax liabilities, instead of 120 days.
  • The IRS is providing flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted offer in compromise.
  • The IRS will automatically add certain new tax balances to existing installment agreements, for individual and out-of-business taxpayers, as opposed to automatically defaulting the agreement, which can complicate matters for those trying to pay their taxes.
  • Some qualified individual taxpayers who owe less than $250,000 can set up installment agreements with the IRS without providing a financial statement or substantiation if their monthly payment proposal is enough.
  • Some individual taxpayers who only owe outstanding taxes for the 2019 tax year and who owe less than $250,000 can qualify to set up an installment agreement without a tax lien notice filed by the IRS.
  • Qualified taxpayers who already have an existing direct debit installment agreement with the IRS can now use the Online Payment Agreement system to propose lower monthly payment amounts and alter their payment due dates.

The IRS offers options for short-term and long-term payment plans, including installment agreements via the Online Payment Agreement system. The service is mainly available to people who owe $50,000 or less in combined income tax, penalties and interest, or to businesses that owe $25,000 or less combined that have filed all tax returns. The short-term payment plans can now be extended from 120 to 180 days for certain taxpayers.