Several clients have contacted us to let us know they have received notices from the IRS recently. In many cases, the notices are telling the taxpayer that their 2019 return was filed but no payment received. Some clients who filed a paper tax return are being notified that there is a credit from payments made but no return received. Other clients have not received a notice but are concerned that their check has not been cashed by IRS yet. Questions we’ve been asked include: should they stop payment of original check and mail another? Should they pay the penalty and interest?
This situation is due to COVID-19 related closures of IRS facilities and IRS manpower shifted to stimulus check processing. The IRS facilities have started to partially open and processing of mail is resuming. As long as you had mailed in your payment and/or return prior to the original due date, our recommendation is to sit tight and wait for the IRS to catch up.
Below is the official IRS explanation on the status of taxpayer correspondence, pending payments and notices.
Taxpayer Correspondence: Taxpayers who mail tax returns and other correspondence to the IRS during this period should expect to wait longer than usual for a response. While the IRS is receiving mail, our mail processing functions remain scaled back to comply with social distancing recommendations. The IRS’s ability to correspond with taxpayers about a variety of issues including requests for information needed to process a tax return remains limited.
As the phased-in resumption of operations have resumed, IRS is now working through its correspondence backlog.
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. See www.irs.gov/payments for options to make payments other than by mail.
Notice Mailings – Some Due Dates Extended to Help Taxpayers: The IRS began mailing backlogged letters and notices to taxpayers in the agency’s steps to return to normal operations. Because of the COVID-19 shutdown, many of the notices were mailed with past due payment or response dates. To save time and costs, the IRS in most cases will not generate a new notice. Instead, the IRS will include Notice 1052, Important! You Have More Time to Make Your Payment, as an insert that will provide a new, updated pay or response date. Please read the insert carefully. It explains why the notice was delayed and, more importantly, provides a new date in which to pay or respond.
Below are key points recipients should note when the notice is received. They should:
- Review the last page of the insert to determine if there is a new due date.
- Disregard the notices if steps have already been taken to resolve the issue.
- Contact the IRS using the number on the notice if you have additional questions. Keep in mind that phone lines remain extremely busy as the IRS resumes operations.
Extended Due Dates: The expired payment due dates printed on the notices were extended, as described in the insert. The new payment due date was either July 10, 2020, or July 15, 2020, depending upon the type of tax return and original due date. More than 20 million notices were mailed since early June with either the appropriate insert or with current dates. Due to an error, affecting a fraction of these notices, about 11,000 notices were sent without the insert. Upon discovery, we immediately began reaching out to these taxpayers providing them with the appropriate information regarding the corrected due dates for a response to the notice and have updated our systems accordingly. All notices that were previously held as a result of the temporary closure of our facilities, have been mailed. As such, this should not be a reoccurring issue.
Visit IRS.gov/coronavirus for more information.