IRS won't provide blanket tax relief for penalties assessed during COVID-19
Saturday, November 21, 2020
It's no secret that COVID-19 wreaked havoc on the 2020 tax filing season. In addition to law changes and a delayed mid-summer filing deadline, previously implemented Internal Revenue Service precautions like shutting down offices are continuing to cause problems.
Those closures likely helped prevent coronavirus infections among IRS personnel, but they also produced a massive mail backlog, estimated at one point by none other than the agency's commissioner at more than 12 million pieces of U.S. Postal Service material.
Those snail mail envelopes included tax payments. But since they weren't opened, the IRS didn't account for them and its automated tax-due system began issuing non-payment notices to people who had paid on time.
COVID notices and levies again causing concerns: To the IRS' credit, when this issue came to light, it halted the notices. Then, after digging out a bit, started sending out payment notices again.
And again, some folks who paid are getting the warnings.
They understandably are freaking out. Their tax advisers are just as understandably frustrated.
If the IRS has such a large backlog, the LEAST they can do is wait to send out Intent to Levy notices until they open and process responses that have already been submitted. This is insane!#TaxTwitter #FundTheIRS https://t.co/wAyjccah17— Brian Streig, CPA (@cbriancpa) November 20, 2020
In addition to calling on the IRS to again stop sending nonpayment notices, many in the tax community also are pushing the IRS to offer widespread relief to taxpayers who, due to coronavirus complications, are facing late-filing and late-payment penalties.
Such hopes, however, were dashed last week by IRS Commissioner Chuck Rettig.
Don't expect widespread penalty relief: "We get it that you would like to have blanket relief," Rettig told online attendees of a Nov. 17 American Institute of CPAs (AICPA) conference. "It is not going to happen, and I think if you were sitting in my chair or Chief Counsel Mike Desmond's chair or others' chairs, you would be able to look at it as we do."
"We've come to the conclusion that there are a series of relief procedures that you should focus on," Rettig added.
Those include, according to the commissioner, reasonable cause and first-time penalty abatements. And those and other penalty relief requests, said Rettig, will continue to be considered case by case.
Those comments from Rettig come from this weekend's two Saturday Shout Out articles:
- Rettig to Tax Pros: Blanket Penalty Relief 'Not Going to Happen' by William Hoffman for Tax Notes and
- IRS commissioner: Penalty relief will not be 'blanket' by Paul Bonner for the AICPA's Journal of Accountancy.
I wish there was betters news. And maybe things will change when there's a new Treasury Secretary after Jan. 20, 2021.
Until then, though, this is the tax penalty hand that we taxpayers and our tax pros have been dealt.
You also might find these items of interest:
- IRS adding QR codes to tax-due notices
- IRS offers tax help to those facing COVID money troubles
- In the wake of disasters & COVID-19, will the IRS be ready for the 2021 tax season?
|Coronavirus Caveat & More Information
In 2020, we're all dealing with extraordinary circumstances,
both in our daily lives and when it comes to our taxes.
The COVID-19 pandemic and efforts to reduce its transmission
and protect ourselves and our families means that,
for the most part, we're focusing on just getting through these trying days.
But life as we knew it before the coronavirus will return,
along with our mundane tax matters.
Here's hoping that happens soon!
In the meantime, you can find more on the virus and its effects on our taxes
by clicking Coronavirus (COVID-19) and Taxes.
Hopefully, this will be resolved. They are dealing with things on a case-by-case basis, so right now, my best advice is to send the IRS your documentation of the timely filing.
Posted by: Kay Bell | Wednesday, November 25, 2020 at 12:35 PM
ok, so my clients are also getting late notices, even though they paid. You said, no Corvid relief, but do I understand, because they have not opened 12 million, pieces of mail, my clients, still have to pay penalties, on payments that were send on time? or will this be resolved.
Posted by: RANDI BOEJE | Wednesday, November 25, 2020 at 06:31 AM