Update on IRS Backlog and Notices

 – August 19, 2020
Update on IRS Backlog and Notices

Many practitioners and taxpayers are frustrated by erroneous notices being sent by the IRS. Specifically, there have been complaints about IRS computer-generated notices that do not accurately reflect the taxpayers’ payments and accounts. The IRS current backlog in processing mail and payments has created these notices.

On Aug. 14, the IRS provided the following update regarding clients' check payments and payment notices:

If your client mailed a check 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 IRS 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 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.

The AICPA’s Tax Advocacy Team has communicated with the IRS and shared the frustrations of practitioners and clients and they have advocated for the IRS to delay collections activities by at least 90 days after July 15.  At that time, the IRS should reassess the appropriateness of re-establishing any collections activities.