The coronavirus has affected us all: Many of us have been downsized, furloughed, reassigned, redistributed or forced to work remotely. Some of us have started new businesses in the face of this; still others – existing business owners who were previously successful, have been forced to shutter themselves.  With safety concerns and financial uncertainty still looming, the only thing we do know is that COVID-19 has affected us all, changing the ways we approach everything; and its impact will be felt for years – and that definitely includes tax planning issues resulting from new legislation.

There will be an unprecedented number of bankruptcies and offers in compromise, accompanied by loss of homes and home sales. People with current and future tax and debt problems may be forced to sell their home, depending on the bankruptcy exemptions and specific rules in their state and it’s important to note that the last three years of federal tax assessments are not forgivable in bankruptcy.

With these kinds of things in mind, it’s now more important than ever to consult with a tax professional to help you navigate through the sweeping changes that have either already begun or are on the horizon. For instance, this may be a great time to consider submitting an offer in compromise for those who qualify and have IRS tax liabilities, given the unknown current economic circumstances.

Offer in Compromise is approved based on current status and circumstance and with no guarantees that a business will recover or you will return to work in a timely fashion, the chances of an offer being accepted by the IRS increases.

It is also a statistical likelihood that the individual states will raise taxes across the board to compensate for reduced tax income from state income and sales tax respectively.

End of year tax planning is already affected by legislative changes such as the reality that that most of the coronavirus-related provisions are for one year, and with this being an election year, a potential new administration may bring with it new changes in the foreseeable future.  As such, in the current landscape, tax professionals are left with a reality that everything we know may be temporary. 

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