The IRS’ Role in Providing Tax Relief to Those Affected by COVID-19

March 25, 2020 | Katherine A. Heptig

Under the proposed Coronavirus Aid, Relief and Economic Security Act, Congress has tasked the IRS with overseeing cash stimulus payments to be made to taxpayers. In addition, last week, the Families First Coronavirus Response Act was signed by President Trump, permitting the U.S. Treasury Department, IRS and U.S. Department of Labor to jointly administer two new refundable payroll tax credits designed to fully reimburse small and midsize employers for the cost of providing coronavirus-related leave to their employees. The mechanism for implementing these payroll tax credits will be an immediate dollar-for-dollar tax offset against future payroll taxes, and refunds where necessary.

Following years of spending cuts, these added responsibilities may ultimately result in better funding for the agency in future spending bills. Coupled with the extended filing season described here and practical challenges resulting from physical workplace restrictions, it is clear that sufficient funding for the IRS is going to be a key consideration in any finalized stimulus bill.

These important steps to ease the burden on taxpayers will only be as good as the resources allocated to those tasked with administration of such relief. Increased efficiencies will be critical to ensure that routine matters are consistently addressed while also adjusting for these newly expanded roles.

Tax practitioners are hopeful that there could even be positive change within the IRS as a result of the current need to create new staffing structures, procedural systems and approaches to customer service.

Although it was not welcomed, COVID-19 brought with it the opportunity to reevaluate the status quo and implement positive changes that will hopefully outlast the current crisis.

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