Summary
- Many small businesses were devastated by COVID-19 and left scrambling to cover payroll, rent, and tax obligations.
- The IRS provided relief in the form of extended deadlines, credits, and suspended collections.
- The Employee Retention Credit gave employers a lifeline to retain staff during slowdowns or shutdowns.
- Relief included delayed income tax payments, credits for sick leave, and access to SBA disaster loans.
- IRS collections enforcement is now active again—making it vital to act before liens or levies occur.
When the world was frantically buying up toilet paper and hand sanitizer at the onset of the coronavirus pandemic, most business owners had more pressing concerns: keeping their doors open, making payroll, and figuring out how to pay the rent.
With lockdowns sweeping across major states like California, New York, Florida, and Massachusetts, restrictions on public gatherings and stay-at-home mandates left countless restaurants, gyms, salons, and other “non-essential” businesses facing an uncertain future. In the early stages of the crisis, over 75% of the U.S. population was under stay-at-home orders.
For employers, surviving the storm meant understanding and leveraging every available form of relief—particularly those provided in the federal stimulus packages and by the Internal Revenue Service. One wrong step could mean the difference between staying afloat or shuttering for good.
IRS COVID-19 Initiatives: Immediate Action to Protect Employers
Deadline Extensions
In an unprecedented move, the IRS extended the federal tax filing and payment deadline for individuals and businesses from April 15th to July 15th. This applied not only to annual returns but also to estimated payments and even some delinquent tax liabilities.
The goal was to free up cash for struggling taxpayers and to allow more time for safe tax preparation. This also helped tax professionals maintain social distancing protocols, avoiding long lines at tax offices.
The Employee Retention Credit (ERC)
Among the most important relief measures for businesses was the Employee Retention Credit (ERC). This refundable payroll tax credit provided employers with up to $5,000 per employee in 2020 and up to $28,000 per employee in 2021 (later capped). The ERC offered a powerful incentive to keep workers employed during periods of reduced revenue or mandated closures.
Unlike some tax benefits that pay off at the end of the year, the ERC could be applied immediately to reduce the amount of payroll taxes owed. If the credit exceeded the payroll tax due, employers could apply for an advance refund using Form 7200.
Those who were behind on employment taxes found this immediate credit particularly valuable. Relief couldn’t wait until year-end. Proper filing of Form 941—and in some cases, amended returns via Form 941-X—allowed businesses to access funds quickly.
For employers who missed the opportunity to claim the ERC, it’s still possible to file amended payroll tax returns. However, the IRS is closely scrutinizing claims due to widespread abuse. Working with a qualified tax professional is highly recommended.
According to the IRS, more than 3.6 million ERC claims were filed through 2023, with over $230 billion issued in refunds.
Paid Sick Leave and Family Leave Credits
Under the Families First Coronavirus Response Act (FFCRA), employers were also reimbursed for offering COVID-related sick leave. These refundable credits applied to wages paid to employees who took time off due to illness, quarantine, or caregiving responsibilities.
Although this program has ended, eligible employers who didn’t originally claim these credits may still be able to apply through amended payroll tax returns.
SBA Disaster Loans
Beyond the IRS, the Small Business Administration (SBA) played a pivotal role in helping businesses stay solvent. The Economic Injury Disaster Loan (EIDL) program offered working capital loans, while the Paycheck Protection Program (PPP) helped cover payroll and rent.
Many tax professionals, including our team at Fortress Tax Relief, shifted gears to help clients prepare the proper documentation and avoid common SBA application pitfalls. Navigating the red tape was a job in itself—and one that continues today in the form of forgiveness applications and audit responses.
Hiring a tax resolution expert with experience in multiple federal systems—IRS and SBA alike—can provide critical guidance and peace of mind.
What If You’re Still Owed Money or Behind on Taxes?
Even if your business didn’t experience a full shutdown, the pandemic introduced a wide range of cash flow problems. Construction subcontractors, suppliers, consultants, and service providers often waited weeks or months for payment. When revenue is delayed, so is payroll—and tax compliance.
That’s why many business owners found themselves falling behind on employment taxes or failing to file on time. And while some relief programs helped, they often weren’t enough to bridge the full gap.
Now that IRS enforcement has resumed in full, these back tax issues could trigger levies, garnishments, and penalties.
IRS collections enforcement activities surged after the pandemic pause, with field enforcement actions increasing by over 35% in recent years. [Source]
Dealing With IRS Collections: What’s Changed?
During the height of the pandemic, the IRS suspended many collection actions and closed live phone support for the Automated Collections System (ACS). If your case wasn’t assigned to a local Revenue Officer, it was nearly impossible to speak to someone.
As a tax professional, I began contacting nearby Revenue Officers—even if they weren’t assigned to my client’s case—just to get a status update. In many cases, they were sympathetic and helpful.
Today, Revenue Officers, Settlement Officers, and Offer in Compromise specialists are back to work, and enforcement actions are back on the table. Delinquent taxpayers are once again at risk of having their accounts levied, wages garnished, and liens filed.
That makes it critical to resolve tax issues before enforcement escalates.
Why Hire a Tax Professional Now?
The current landscape demands more than basic tax filing. It requires a strategic approach to tax defense.
An Enrolled Agent or CPA may be helpful with filing returns or navigating audits—but a tax attorney brings a broader scope. Tax attorneys are specifically trained to negotiate with IRS collections, draft legal arguments, and work through settlement options like Offers in Compromise.
At Fortress Tax Relief, we specialize in helping businesses and individuals resolve back tax debt through legal advocacy. Whether it’s an IRS installment agreement, penalty abatement, or Offer in Compromise, we represent your interests directly with IRS personnel.
Don’t wait for enforcement actions to begin. With the IRS now pursuing collections again, proactive steps can mean the difference between manageable payments and a financial crisis.
Frequently Asked Questions (FAQ)
Q1: Can I still claim the Employee Retention Credit (ERC)?
Yes. While the program has ended, eligible businesses may still file amended payroll returns to claim the credit. Be aware the IRS is auditing ERC claims and has paused processing on some pending applications.
Q2: Are IRS collection actions active again?
Yes. The IRS has resumed issuing levies, garnishments, and liens for unresolved tax debt. If you’re behind, now is the time to act before enforcement begins.
Q3: What if I can’t pay back taxes in full?
You may qualify for an installment agreement or Offer in Compromise. These programs allow you to pay over time or settle for less than the full amount.
Q4: Is penalty relief still available?
Yes. First-time penalty abatement and reasonable cause relief are still options for qualifying taxpayers. A tax professional can help you determine eligibility.
Q5: How can Fortress Tax Relief help?
Our tax attorneys specialize in IRS collections defense. We negotiate directly with IRS agents, protect your assets, and guide you through settlement options.
Conclusion
The IRS offered a lifeline during the COVID-19 crisis—but the clock has run out on leniency. If your business is carrying unresolved tax debt, waiting could put your livelihood at serious risk.
With enforcement actions fully active again, and the risk of audits and penalties increasing, the time to act is now. Don’t face the IRS alone—get experienced legal representation on your side.
Contact Fortress Tax Relief today and speak with a dedicated tax attorney who can help you navigate your options and protect your financial future.
