As the COVID-19 pandemic hit the United States, the Internal Revenue Service was one of the many government organizations that was hit with widespread office closures. This impacted their operations and the ability of taxpayers to address any tax issues they have had. In recognition of the issues, the United States Treasury even extended the general April 15 tax return filing and payment deadline until July 15, 2020. This meant that those required to file a United States income tax return (and other returns) now have until July 15, 2020 to file their tax returns and pay any tax due before they would be subject to any interest and penalties. July 15, however, is now only 9 days away. If you haven’t yet filed your tax return, now is the time to do so. If you still need more time to file your return, you can file for an automatic extension until October 15, 2020. This extension only applies to filing. If you haven’t paid any tax due for your 2019 tax return, you should expect penalties and interest to start after the July 15 deadline.
In addition to the extended Form 1040 Income Tax Return filing and payment time frame, the IRS also announced its “People First Initiative.” This kindly named policy outlined certain actions that the IRS would not take against taxpayers with unpaid tax debts during the suspension period. Among other things, the policy suspended:
- the issuance of any new Notices of Federal Tax liens (known as a “NFTL”) unless the IRS believed it was still necessary to do so.
- the issuance of any new tax levies unless the IRS believed it was still necessary to do so. This includes garnishments, bank account levies, levies on accounts receivable, asset seizures, etc. The final notices threatening these levies have also been suspended.
This suspension period during which the IRS will not file liens or levies lasts only until July 15, 2020. This means that we can expect the IRS to start filing liens and levies again on July 16, 2020. While it is hoped that the IRS will continue to exercise some restraint on collection actions taken against the public while the COVID-19 pandemic persists, they are not required to do so. Therefore, make the most of these last 9 days of relief before the IRS is again allowed its full range of collection action.
To make the most of these last day and avoid the potential filing of liens and levies, you should prepare to take action on resolving any unpaid tax debt. Perhaps an installment agreement is appropriate. Maybe you qualify for an “Offer in Compromise.” Based on your current circumstances, the government may even consider you “currently non-collectible” and leave you alone for a period of time to allow you to get your affairs in order. However, the IRS will only know how to resolve your case if you are interacting with them. If you don’t try to work with them, they will think that you are ignoring them and you should expect that they’ll use liens and levies to try and collect any unpaid tax.
(While I’ve only discussed the IRS above, the State of Wisconsin and many other states have adopted policies similar to the IRS until July 15. Therefore, we should also expect that state tax authorities will get back to their own collection activities as well after the deadline passes.)
Taxing Thoughts 