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IRS and Covid-19 Update


The onset of the COVID-19 pandemic in early 2020 saw an influx of major changes across personal and professional landscapes—including Internal Revenue Service operations and enforcement. The IRS scaled back a number of its operations to offer taxpayers what relief it could as it navigated the uncertainty of the early days of the pandemic. Now, as the IRS attempts to resume its activities, it faces challenges with a massive backlog of returns and correspondence and issues with limited funding.

IRS enforcement was temporarily shut down between March and July 2020 as the agency transitioned to a fully virtual work environment. Simultaneously, it announced the “People First Initiative,” a program aimed at offering relief to struggling taxpayers. The initiative modified several key IRS activities: new audits were delayed, liens and levies were suspended, private collection actions were delayed, installment agreements were restructured and/or suspended, and offers in compromise negotiations were extended and/or suspended. As the pandemic progressed, the People First Initiative was gradually modified to reflect contemporary needs—the program is still in action today, although on a smaller scale. The IRS also distributed Economic Impact Payments three separate times over the past two years, totaling over $830 billion in payments to taxpayers, not including individual tax refunds.

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