One year into the COVID-19 pandemic, and two of the most frequent questions I am asked is “will the IRS levy my bank accounts or wages during a national crisis?” or “why is it taking so long to process [x, y or z]?”
As with many questions about how the IRS does things, the answer is a little complicated.
In late March of 2020, the IRS temporarily halted enforcement action against all businesses and individuals (absent very unusual circumstances), delayed filing deadlines until July 15th, gave taxpayers a break on their installment payments, withheld from lien filings, and generally provided my clients with a temporary reprieve against the usual onslaught of misery they have the power to unleash against delinquent taxpayers. This relief was explicit and codified into IRS Collections procedures.
This relief was critical last year, when millions of people instantly lost their jobs, income sources, and, frequently, their health insurance during a time when health was of utmost importance.
In addition to the reprieve from collection action, the IRS provided employers with the Employee Retention Credit, and the federal government provided access to hundreds of millions in Paycheck Protection Program loans, which had the potential to be forgiven if employers used the funds to pay employees, or other select business expenses. Some of those programs still have funds, and they may be renewed with more funding if the U.S. House COVID relief bill passes the Senate.
Unfortunately, the enforcement relief to delinquent taxpayers officially ended on July 15, 2020. The IRS has not issued any new public guidance or directives to its Collections employees as to whether taxpayers should continue to get relief from levies, liens or other enforcement.
Does this mean that the IRS is going after taxpayers with pre-pandemic gusto?
If you are operating a business with a delinquent tax liability, and your case is assigned (or shortly will be assigned) to a field Revenue Officer, then you very easily could see levies issued to your bank, or to your customers if you fail to resolve your tax debt in a fashion that is acceptable to the IRS. In my own professional experience, I have seen business clients suffer under the same kinds of vigorous enforcement that those clients experienced in January 2020, when “pandemic” was not a household term. In almost every case, the Revenue Officers I work with are requesting documentation from my clients and threatening to levy all funding sources if deadlines are missed. Given that the IRS has historically been prone to collect business tax debts more aggressively, this should not be a surprise.
Individuals, too, should be more vigilant about whether they are taking the proper steps to resolve their tax balances. In particular, for those individuals who have large tax liabilities, the IRS has not been compassionate since the moratorium on levies ended July 15th. My colleagues and I have witnessed IRS employees threaten (and issue) bank levies and wage levies against individuals. In multiple cases, the IRS has begun preparing paperwork to seize and sell taxpayers’ homes. In one case, the home is a vacation rental; in another case, the IRS is threatening to seize a primary residence of a taxpayer.
You read correctly: At a time when new COVID infections are about as high as they were during the Summer 2020 surge, the IRS is prepared to kick people out of their homes if necessary.
Another issue that has frustrated clients and tax professionals alike is the incredibly slow response time of the IRS. Depending on the opinion of the individual I speak with at the IRS call centers, the IRS can take between 10 and 20 weeks to process tax returns, and even longer to issue refunds, or apply payments. This creates frustration among clients who believe they have paid their debt down further than the IRS records seem to indicate. Moreover, I have submitted proposals to the IRS via mail, and have witnessed MONTHS-long wait times to hear a response.
Given the fact that the IRS takes months to respond to proposals but seems all-too-trigger happy with levies in the meantime, you can do the math yourself: Resolution of tax problems may be more frustrating right now than ever.
Fortunately, manhandling a lumbering bureaucracy to work in your favor is one of our specialties. In order to get the IRS to respond to proposals or withhold from collection action, our firm, Fortress Tax Relief, has taken aggressive steps to protect clients by frequently exploiting the slow IRS apparatus to convince them to put firm “holds” on enforcement. Whether through filing Collection Appeals, requesting manager contacts, or insisting upon on-the-spot review of financials after we submit them via fax, we have found ways to manipulate the process to create our own protections for our struggling taxpayers.
In short, the IRS is slow to do the work that would benefit taxpayers, and quick to do the work that would destroy taxpayers financially. You do not want to navigate that meat-grinder alone, so make sure you are facing off with the IRS during the pandemic with a strong advocate at your side.
Fortress Tax Relief has caring and knowledgeable professionals on staff who would be happy to outline a solution tailored to your specific circumstances. We can help determine which tax relief program would be best suited to you, and, with very few exceptions, we can prevent aggressive enforcement action provided that you follow our instructions. There is no charge for the call, so pick up the phone and call us today.