IRS, SEC Expand Regulatory Relief Even Further

Chris Gaetano
Published Date:
Mar 26, 2020
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The IRS and the SEC have both announced expansions to regulatory relief in the wake of the coronavirus pandemic.

The IRS announced what it calls its "People First Initiative," which goes well beyond the initial income tax deadline relief that was approved last week. This new relief includes the following provisions:

* Existing installation agreement payments due between April 1 and July 15 are suspended, although interest will continue to accrue on unpaid balances.

* Pending offer in compromise (OIC) applications have until July 15 to provide requested additional information to support a pending OIC. In addition, the IRS will not close any pending OIC request before July 15, 2020, without the taxpayer's consent.

 * Taxpayers have the option of suspending all payments on accepted OICs until July 15, 2020, although, by law, interest will continue to accrue on any unpaid balances.

* The IRS will not default an OIC for taxpayers delinquent in filing their 2018 returns, although they should file any delinquent 2018 return and their 2019 returns before the new July 15 deadline.

* Liens and levies, including seizure of personal residence, initiated by field revenue officers will be suspended, although the IRS will continue to pursue high-income non-filers and perform similar activities when warranted. New automatic, systemic liens and levies will also be suspended.

* The IRS will suspend work with the State Department to revoke passports of seriously delinquent taxpayers.

* New delinquent accounts will not be forwarded to private debt collection agencies.

* There will generally be no new field, office, or correspondence examinations, although the IRS warned that it may start new examinations where deemed necessary "to protect the government's interest in preserving the applicable statute of limitations." This also means that in-person meetings regarding examinations will be suspended (though they can still meet remotely). However, if taxpayers want to go forward with an examination anyway (perhaps due to staffing or documentation considerations), the IRS will try to oblige them.

* Taxpayers will have until July 15 to respond to the IRS to verify that they qualify for the Earned Income Tax Credit or to verify their income. Until then, the IRS will not deny these credits for a failure to provide requested information.

* If the statute of limitations on a matter is not meant to expire during 2020, "the IRS is unlikely to pursue the foregoing actions until at least July 15, 2020."

The IRS also warned tax practitioners that "depending on staffing levels and allocations going forward, there may be more significant wait times for the [Practitioner Priority Service]."

"The IRS will continue to review and, where appropriate, modify or expand the People First Initiative as we continue reviewing our programs and receive feedback from others," IRS Commissioner Chuck Rettig said. "We are committed to helping people get through this period, and our employees will remain focused on these and other helpful efforts in the days and weeks ahead. I ask for your personal support, your understanding – and your patience – as we navigate our way forward together. Stay safe and take care of your families, friends and others."

The IRS will release guidance with further details at a later date.

The SEC, meanwhile, released its own bevvy of regulatory relief measures. Earlier in the month, the commission announced relief from certain filing obligations for companies affected by the coronavirus pandemic, providing publicly traded companies with an additional 45 days to file certain disclosure reports that would otherwise have been due between March 1 and April 30, subject to certain conditions. Under the new order, the filing relief period now applies to filings that would have been due between March 1 and July 1.

Similarly, the agency expanded the filing relief period for investment funds and advisers from April 30 to June 30. The SEC said it will generally not take enforcement action in this time if a registered fund does not deliver to investors the current prospectus when it is not able to be timely delivered because of circumstances related to COVID-19. Further, relief from in-person board meeting requirements, as well as requirements for filing Form N-23C-2, have been extended to Aug. 15. 

The SEC also took the time to release disclosure guidance on the coronavirus. In general, the guidance encourages timely reporting, while recognizing that it may be difficult to assess or predict with precision the broad effects of COVID-19 on industries or individual companies. It asks companies to consider a number of factors in assessing whether to disclose a pandemic-related impact, such as how it has affected access to capital or credit, or how it has affected balance sheet assets.

The guidance also warned companies and related persons to refrain from market activities prior to disclosure of material information to the public, "in light of their obligations under federal securities law." It also advised firms to not get too creative with their non-GAAP metrics and to remember current laws and regulations around how these custom metrics are reported. Yet it said that in the event that, due to pandemic disruptions, a real GAAP measure isn't available, the SEC would not object to companies reconciling a non-GAAP financial measure to preliminary GAAP results that either include provisional amount(s) based on a reasonable estimate, or a range of reasonably estimable GAAP results.

“Health and safety continue to be our first priority,” said SEC Chairman Jay Clayton.  “These actions provide temporary, targeted relief to issuers, investment funds and investment advisers affected by COVID-19.  At the same time, we encourage public companies to provide current and forward-looking information to their investors and, in these uncertain times, companies are reminded that they can take steps to avail themselves of the safe harbor in Section 21E of the Exchange Act for forward-looking statements.”

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