Tag Archives: backdated IRS letters

IRS, Tips

IRS Sending Overdue Notices For Checks Sitting In Its Unopened Mail

1 Comment

A new notice appeared on the IRS website late on August 13th:

Pending Check Payments and Payment Notices: If a taxpayer mailed a check (either with or without a tax return), it may still be unopened in the backlog of mail the IRS is processing due to COVID-19. Any payments will be posted as the date we received them rather than the date the agency processed them. To avoid penalties and interest, taxpayers should not cancel their checks and should ensure funds continue to be available so the IRS can process them. To provide fair and equitable treatment, the IRS is providing relief from bad check penalties for dishonored checks the agency received between March 1 and July 15 due to delays in this IRS processing. However, interest and penalties may still apply. Due to high call volumes, the IRS suggests waiting to contact the agency about any unprocessed paper payments still pending.

Claudia Hill, EA (always one of my favorite speakers at the annual IRS Tax Forum), wrote an excellent and somewhat scathing article in Forbes regarding the current disaster we as CPAs are dealing with on behalf of our clients — the IRS is many months behind in opening its mail, yet their automated system for sending out scary letters to taxpayers for unpaid taxes is back up-and-running.

Reports Claudia, having spoken to a “a hard-working, somewhat overwhelmed IRS customer service representative”:

… while IRS automated computer billings had resumed, any mail received at the Service Center between March 13 and June 30 was likely still unopened in the rooms of boxes containing mail that had arrived during the Covid-related shut-down. This included tax returns and payments directed to Service Center addresses. The Service Centers received about a million pieces of mail per week during that time. No one was there to open it.

IRS billing process is consistent; it is machine programmed. After the first letter goes out, approximately four weeks later if no money is deemed received, a second notice goes out. Each letter becomes sterner. By the third letter, IRS is reminding taxpayers of their rights to lien, levy and seize in the event of non-payment.

As she rightly points out, ignoring IRS notices can lead to serious problems — because their system is automated, a human being must intervene in order to (as I’ve always described it to clients) throw a cog in the wheel to stop it from churning.

The problem is exacerbated by the fact that these days, getting an IRS representative on the phone is rather difficult. If you are in this situation, I recommend calling the phone number on your notice during non-peak hours (7-10 am & 6-7 pm), Tue-Thu (if you do not have a number on your notice — the main one is 1-800-829-1040). Be ready to turn on your phone’s speaker and keep yourself busy with a project in the meantime. Or, as was recommended by John Sheeley, EA in his weekly tax update class yesterday, use an app that waits on hold for you and calls you back when a rep comes on the line.

Claudia offers these suggestions for the call:
1) Get your documentation ready:
– copy of the certified mail receipt
– copy of your checkbook showing you wrote the check
– copy of your bank statement showing it has not been cashed
2) If you are told about the mail delay, ask them to place a “stay-up” on your account for as long as they believe it will take to open the mail and process millions of pieces of correspondence and checks.

And good luck!

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

IRS, Tips

IRS Suddenly Delivering Thousands Of Late Letters — Extends Due Dates on Balances

Leave a comment

Due to office closures, the IRS wasn’t able to mail out letters to taxpayers. The overdue notices are being delivered to taxpayers now — and confusing us all to no end. The IRS says the due dates printed on the notices have been extended.

I received a few panicked texts and chats from clients and colleagues this week, as a result of the receipt of IRS letters with dates such as April 6th and May 4th (mind you, today’s June 16th — making these letters 1.5-2.5 months late).

As it turns out, the IRS wasn’t able to mail out the pre-printed letters to taxpayers due to office closures during the ongoing COVID-19 pandemic. Apparently, given the amount of time it would take to reprogram IRS systems and generate newly-updated notices, “some of the notices that taxpayers will receive show due dates that have already passed.” They claim that each notice will come with an insert confirming that the due dates printed on the notices have been extended.

However, this was not the experience we had — in the first case I encountered, no insert was received, and not only had the due date passed… but the letter-date itself was more than two months’ passed; and in the intervening months, a refund check had arrived, with no explanation. The amount they were claiming was due in the most recent back-dated letter had a) since been paid, then b) found erroneous and then c) refunded. Imagine my client’s confusion.

Normally I’m a huge fan of the IRS — inasmuch as I recognize how overworked and underfunded they are. But there’s no way to view this other than a major clusterfest.

And my clients and colleagues aren’t the only ones freaking out. Basically what happened was that since the IRS was shut down for a while due to the COVID-19 pandemic, letters weren’t going out — so when they reopened, ALL these late letters went out. This was apparently the week for it — loads of people are getting letters all-of-a-sudden, with no reference to any activity since then. Furthermore, a lot of people are getting “late payment” letters for various taxes that were due 4/15, because they didn’t change their system internally to reflect the new due date of 7/15. According to Accounting Today, the IRS said Monday that these notices will be delivered to taxpayers in the next few weeks, so expect a lot of scared, confused taxpayers.

Solutions? Well, if this is due to personal income taxes, you can go to the IRS website and check to see if you have a current balance due; but to my knowledge they do not have a similar system for payroll taxes, unfortunately. In this case you could try to call the IRS, but they’re still not entirely ramped up yet, so the hold time could be interminable. In case you want to give it a try (especially if you’re concerned about penalties or interest), then the number for business services is 800-829-4933.

This is, by the way, CRAY-CRAY. I’m 48 years old and have never seen anything like this.

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.