The hit by COVID-19 to the economies in western states in the oil patch, such as North Dakota, Wyoming and Montana, has been intensified by the simultaneous bust in the oil market. This double hit to the economy may open up opportunities for taxpayers who have suffered financial downturns to obtain tax relief under an existing IRS installment agreement or other IRS tax resolution option.
Under a new program, the People First Initiate, the IRS is permitting monthly payments on existing installment agreements to be postponed until July 15. Interest on the outstanding tax will continue to accrue, but the taxpayer can withhold further payment until July 15.
For taxpayers who have had a change in finances with the economic downturn, the IRS has a number of installment agreement programs that that the taxpayer can enter into in order to obtain monthly payments. The taxpayer may enter into IRS installment agreements for tax balances of up to $250,00 without completion of an IRS Form 433 financial statement, depending on circumstances. Moreover, depending on the taxpayer’s income and assets, the taxpayer may be a candidate to enter into an offer in compromise to settle tax liability.
While western states including North Dakota and Wyoming have yet not adopted similar provisions for tax installment agreements and other state tax resolution options in the face of the economic downturn, often the revenue departments of states will work with a taxpayer who has suffered a financial downturn to rework an installment agreement to fit the taxpayer’s reduced financial situation.
Jared M. Le Fevre is a Partner in the Tax, Trusts and Estates Practice Group of Crowley Fleck PLLP. Mr. Le Fevre represents taxpayers before the IRS, IRS Independent Office of Appeals, Tax Court, Federal District Court and state tax agencies throughout Montana, Wyoming, North Dakota, Idaho, and Utah. Mr. Le Fevre is involved in federal and state and local tax audits, appeals, and tax resolution throughout these western states. Mr. Le Fevre also advises clients on the tax effects of business and real estate transactions.