IRS backlog resulting in erroneous penalty notices
Thursday, August 20, 2020
Word is spreading about the IRS and its significant backlog processing mailed-in tax payments. Accountants or their clients may have received a late-payment notice despite having mailed a check in on time. These notices were computer generated and went out to taxpayers based on whether their payment was processed.
The IRS sent the following information Aug. 14 about pending check payments:
If a 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.
This week, the House Ways and Means Committee chair urged the IRS to cease all penalty notices until the backlog is cleared.
If accountants or their clients received a computer-generated notice that may have resulted from the backlog, the IRS has asked affected taxpayers to wait to contact the agency.