The Internal Revenue Service, in its most recent update on IRS Coronavirus Tax Relief webpage, has posted information regarding the handling of incorrect late payment notices. The IRS notes that they continue to process returns and issue refunds and are working hard to get through its correspondence backlog. However, the IRS states that it is experiencing delays in processing returns, due to limited staffing.
The backlog of correspondence includes checks that have been mailed by taxpayers to the IRS. The IRS states that these payments will be posted as of the date the checks are received, and not the date the IRS processes the check. The IRS says that to avoid penalties and interest taxpayers should not cancel their checks so that the IRS can ultimately process them.
The IRS is providing relief from bad check penalties for dishonored checks the IRS has received between March 1 and July 15 due to the processing delays caused by the IRS. However, interest and penalties may still apply. Due to high call volumes, the IRS recommends waiting to contact them regarding any unprocessed check payments that are still pending.
The recent update also notes that the IRS has begun mailing backlogged letters and notices to taxpayers in an effort to return to normal operations. The IRS says that due to the COVID-19 shutdown, many notices were mailed out with past due payment or response dates. As a cost-saving measure, the IRS says it will not generate a new correct notice. Instead, the IRS will include Notice 1052, Important! You Have More Time to Make Your Payment, as an insert to the notice or letter. This insert will provide new and updated payment or response date. The IRS has set forth key points that recipients of this correspondence should note:
- Review the last page of the insert to determine if there is a new due date.
- Disregard the notice if steps have already been taken to resolve the matter.
- Visit IRS.com/coronavirus for additional information.
- Contact the IRS using the phone number contained in the notice if you have additional questions. The IRS cautions that taxpayers must keep in mind that phone lines will remain extremely busy until the IRS resumes normal operations.
According to the most recent update, more than 20 million notices have been mailed out since June with either the abovementioned insert or with current response dates. However, the IRS notes that about 11,000 notices were sent without the insert. As a result of this error, the IRS has been reaching out to taxpayers with information regarding the corrected dates for a response to the notice and have updated their systems for the correction. The IRS does not expect this to be a recurring issue.