The novel coronavirus (COVID-19) has resulted in a serious plunge in America’s economy. According to the advance estimate of the Bureau of Economic Analysis, the real Gross Domestic Product (GDP) dropped at an annual rate of 32.9 percent in the second quarter of 2020 — the worst ever recorded in history.
The Labor Department reported that unemployment insurance claims totaled 17 million ending July 18, 2020.
In response to the alarming effects of the COVID-19, the Internal Revenue Service (IRS) had made some adjustments in Offer in Compromise (OIC) which took effect until July 15, 2020.
The IRS provided below Frequently Asked Questions on the OICs:
Taxpayers may still submit an Offer in Compromise if paying the full amount will trigger a financial hardship on their end. The OIC Pre-Qualifier tool must be considered before submitting an offer.
There are other payment options that can be explored: Installment Agreement and a temporary delay in the collection process. Taxpayers who are amenable to using the payment plans can do it via the IRS online application.
Sending mails to the IRS is being discouraged. However, if a taxpayer receives a returned mail from the US Postal Service, he or she should keep a copy of the returned offer and resubmit it once the IRS is back to accepting OICs.
Taxpayers with pending or accepted offers are encouraged to continue making the required payments. Temporary relief is available for those affected by COVID-19.
Offers Under Investigation:
If a taxpayer skipped payments between March 25 through July 15, 2020, while his or her application is still under investigation, the taxpayer must resume the payments after July 15, 2020. Once the offer has been accepted, the taxpayer’s offer will be amended, which will allow him or her to settle the missed payments.
Already Accepted Offers:
If the taxpayer is still incapable of paying the skipped payments and also the agreed amount in their accepted offer because of COVID-19 hardship, he or she must contact the IRS through its phone number.
Taxpayers must provide the requested information to have their OICs approved even if the suspension period is over. Those who are unable to submit the documents or returns must contact the IRS employee found on the correspondence
The Offer in Compromise is an agreement between the IRS and the taxpayer that allows the latter to pay the tax debt for less than the amount owed. The OIC is usually offered to those taxpayers who are unlikely to pay the full amount and will experience more serious financial burden.
The goal of the OIC is to collect the amount at the earliest possible time. Those months of lockdowns and quarantines have obviously crippled a lot of businesses in all sectors and also the workforce, making it more difficult for some taxpayers to settle their tax debts.
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