Tax Blog

What COVID-19 Means for Tax Season

By now, most of us are feeling the effects of the coronavirus disease (COVID-19). Hopefully no one reading is getting sick but there are still challenges. Maybe your job is on hiatus and you’re not getting paid or fully paid. If you have stocks, undoubtedly those have been bruised and battered. Pretty much everyone I know is scrambling to figure out childcare options when schools are canceled but your work isn’t.

As I write this, I am stuck in my hotel with my 5-year-old as a result of health precautions. It’s a whole lot of fun, but it is definitely making it a challenge to carry on business as usual.

As we face the uncertainty of this new public health frontier, even the Internal Revenue Service is going to be veering from their standard practices. We’ve been keeping a close eye on communications from the IRS. Nothing is certain yet but I wanted to share what we are seeing.

Based on their publicly available comments, here are some predictions for this year’s tax season:

  • Tax deadline very likely extended. Due to COVID-19, there is a high likelihood that the IRS will extend the April 15 deadline. We don’t know how long the extension will be but hope for more communications in the near future.  (UPDATE: The deadline has now been extended.)
  • 2019 debts may have a “pay later” option. If you still owe for 2019, the IRS may allow you to make a late payment.
  • In-person audits should get put on hold. The IRS flags some returns for audits. If you are notified about an audit, it doesn’t necessarily mean that you have done something wrong. Rather, the IRS selects some returns for additional review in order to determine that you reported everything accurately. Audits can be performed in two ways: in-person and by mail. Due to COVID-19, the in-person audits will be put on hold and replaced by mail audits.
  • In-person collection meetings also likely to be put on hold. In 2018, the IRS stepped up their face-to-face meetings between IRS revenue officers and the taxpayers they are assigned to. The purpose of these meetings is to expedite the collections process for the benefit of the IRS as well as taxpayers seeking to secure resolutions for their tax debt. These in-person meetings may be canceled until further notice.
  • Tax court on hold. With respect to the Centers for Disease Control and Prevention guidelines about limiting exposure to congregate settings (crowded public places where close contact with other people may occur), the government will delay tax court trial sessions for all but the most urgent cases. Some Tax Courts have already done so. Tax Court is a federal court that allows an individual or organization to contest a tax deficiency determined by the IRS.
  • Possible “collections holiday.” For political reasons, there is a chance that there will be a “collections holiday,” or temporary pause of IRS tax collections process. However, this holiday will not likely apply to tax debt for the years prior to 2019.
  • Revenue officers may become available only by phone. Just as with other workplaces, some IRS employees will be telecommuting to minimize the risk of coronavirus. Or if they are still coming to the office, they will be limiting contact with the public. As such, revenue officers will almost exclusively conduct their work over the phone.

What to do now?

Here are a few tips for you in light of these changes:

  1. Realize that these are the likely short-term adjustments. While this temporary relief will be helpful, remember that things will likely be back to normal before long. If you have unresolved tax debt, contact our team of tax relief attorneys to work out a long-term solution.
  2. In light of the temporary (and still uncertain) nature of many of these changes, we recommend that you be proactive. If you really need an extension, don’t bank on the coronavirus changes to buy you time—actively request an extension. Make sure that you do so early as the system may get overwhelmed at the last minute.

And in keeping with my belief that there’s always a silver lining, look for some positive changes to come out of this current public health crisis. For one, it may be the catalyst that causes the IRS to finally allow broad scale video meetings and the use of email—changes that have been a long time coming.