Thursday, April 23, 2020

Living in the World of COVID-19: You May Want to Check in with the IRS to Make Sure They Know Where to Find You!

IRS (Finally!) Launches Registration Tool For Stimulus ChecksNo one can predict the future, but it is possible there will be another round of direct payments to American households. One legislative proposal is for a $2,000 per month payment for each household for a six month period. It’s not possible to say what additional relief will be made available, but the easiest way for the government to do its job here is by using the existing infrastructure of the IRS and the Social Security Administration since their computers already know where you live.

But this is not simply about collecting $2,000. In addition to getting in the right line for the next round of Economic Impact Payments, there is a much bigger reason to get square with your taxes. The IRS’ People First Initiative provides for relief on certain enforcement procedures, but there are also pitfalls for the unwary which I wrote about in more detail here.

In three weeks in March and April, Congress passed more tax legislation than it usually does in a year and a half. The impact and the details of how the new legislation affects businesses and family matters is almost too complex to enumerate here, but see the Resources Page of our website at mopsickcarrere.com for a work-in-progress listing.

Clearly, because the new COVID-19 tax laws so extensively impact almost every family and business in the country, checking-in right now with a competent tax person is essential. It is very possible that the new law may cause you to amend your already filed 2019 or prior year’s returns, or learn of a new tax benefit to which you are entitled, or even change your tax preparer if you inquire and find they are not up to the job of both reviewing your business situation and being conversant in every single tax aspect of the new legislation.

We work closely with a number of very good accounting firms and solo practitioners with whom we sometimes join up with to serve a single client.

In these uncertain times, people are looking inwardly, defensively, and are reevaluating every aspect of their financial status. How much money is coming in to the household, and how long can the family continue to depend on a particular source of income?  A good accountant will be able to help you analyze your financial affairs and control your costs.

Your ability to survive the crisis and rebuild your business as we learn about the permanent changes affecting our lives going forward, depends in part on "being current” with the IRS. Sadly, that is big problem for millions of Americans.

Those who meet the filing threshold and continue to keep their head in the sand without consulting with a tax professional now may be setting themselves up for problems in the future with the IRS. While it is true that the current IRS guidelines do not require the filing of delinquent returns in order to receive future Economic Impact Payments, taxpayers would be well-advised to work with a tax professional now to avoid almost certain future IRS scrutiny including, the possibility that the IRS may want to see if there are criminal tax issues surrounding past delinquencies.

But what happens at the IRS when you suddenly start filing after years of non-filing? Will the IRS send a special agent to your door? Not likely. They may want to talk to you after things settle down, but IRS resources are now stretched very thinly, for how long we do not know.

Prior criminal conduct may be a different matter; but for the most part, the IRS will engage you about “getting current” and work with you or your representative.

Everyone knows the IRS has extended the duty to file and pay until July 15 and that it relaxed the rules on installment payments and other collection remedies (see Ryan Carrere’s blog here). However, no one in Washington has announced there will be a general amnesty and your tax debts forgiven. That said, for those who already owe the IRS money and have liens filed against their names, now may be a time to consider an Offer in Compromise.

There are multiple issues as we move forward. As with other hastily enacted tax legislation, practitioners are noting inconsistencies and confusion as these new provisions are being analyzed. When will IRS regulations be written for further guidance on the new net operating loss rules, tax credits and refunds? Another issue is, will there be procedures to appeal government decisions on how much direct payments should be from family to family?

We at Mopsick Carrere, LLP are working hard, as are tax professionals around the country, to read, study, publish, and talk about the new legislation. Please keep up with our website for new developments which we are adding almost every day.