In response to the coronavirus pandemic, the IRS has implemented numerous changes that go well beyond tax filing extensions and stimulus payments. Here are takeaways on the Coronavirus tax changes; significant changes that could affect you and your family:
Early distribution penalty waived
The 10% early distribution penalty on up to $100,000 of retirement withdrawals for coronavirus-related reasons is waived during 2020. New provisions allow tax liabilities on these distributions to be paid over a three-year period. The new rules also allow individuals to return these distributions to the retirement account over a three-year period and not be subject to annual contribution limits.
Required minimum distributions (RMDs) waived for 2020
Required minimum distributions (RMDs) in the year 2020 for various retirement plans are suspended. The corresponding 50% penalty associated with not taking an RMD is also suspended in 2020.
IRS installment agreement suspension
The IRS announced the suspension of payments of all amounts due from April 1 through July 15, 2020, and taxpayers will not be in default on any IRS installment agreement during this period. Interest will continue to accrue on these installment agreements. To cancel a direct debit payment, you have to call the bank. To restart the payment check with your bank for details before the May 1st payment.
Being on the wrong side of the IRS is never fun. If you currently have an IRS installment agreement, look to take the best advantage of this delay.
The IRS will allow you until July 15, 2020, to provide the additional requested information for any pending offers-in-compromise (OIC) and will not close out the OIC during this time without your consent. The IRS is also suspending any payments due under an OIC until July 15, 2020.
Enforcement activities suspended? Perhaps.
The filing and enforcement of liens and levies will essentially be suspended. However, IRS Revenue Officers will continue to pursue high-income non-filers and initiate other actions when warranted.
No new audits
The IRS will not initiate new audits during this time but will act to protect the statute of limitations.
There is so much going on during this crisis, know that you can always trust that SFS Tax & Accounting Services will keep you informed as updates and changes are made. The Takeaways on Coronavirus Tax Changes are an overview of the changes put in place by the IRS.
Contact: Jeffrey Scheider, EA, CTRS, ACT-E, NTPIF
SFS Tax & Accounting Services