After pressure from members of Congress, the National Taxpayer Advocate, and the Tax Professionals United for Taxpayer Relief Coalition, a group of organizations formed the to help make this third Covid-affected tax season a bit smoother, the Internal Revenue Service has decided to suspend sending of most taxpayer notices.
This latest moratorium on taxpayer notices is the second in less than two weeks. It comes on the heels of the major taxpayer problems created by issuance of automated collection notices, or CP-80s. These alerts normally go out when a taxpayer owes tax, and the IRS has no record of a taxpayer filing a tax return.
However, the IRS is the source of many of the unrecorded returns. The backlog created when the agency shut down most of its operations as a coronavirus precautionary measure meant that millions of taxpayers' proper and timely tax return filings weren't processed.
The IRS announced on Jan. 27 it would quit sending these missing tax return notices. But the problems were only with the CP-80s.
Tax pros talked, IRS listened: "Essentially, we're talking about those erroneous notices that people are getting. People are getting one notice. People are trying to respond to the IRS; they can't reach or get through to the IRS. All of a sudden, these notices become liens and levies. It starts to escalate when it could've been a quick resolution, so discontinuance of the automated collections activities would be really great," said Melanie Lauridsen, AICPA senior manager for Tax Policy and Advocacy, in a recent Journal of Accountancy podcast.
The IRS apparently was listening to those calling for additional notice action. On Wednesday, Feb. 9, the IRS announced the suspension of more than a dozen additional notices to taxpayers.
Joining the CP-80s on the stop-mailing list are balance due notices and unfiled tax return notices. The total notices on hold, counting the CP-80, comes to 11 mailings to individual filers and four to business taxpayers. They are listed in the table below.
|CP80||Unfiled Tax Return||This notice is generally sent when the IRS credited payments and/or other credits to a taxpayer’s account for the tax period shown on the notice, but the IRS hasn’t received a tax return for that tax period.|
|CP59 and CP759 (in Spanish)||Unfiled Tax Return(s) - 1st Notice||IRS sends this notice when there is no record of a prior year return being filed.|
|CP516 and CP616 (in Spanish)||Unfiled Tax Returns – 2nd Notice||Request for information on a delinquent return as there is no record of a return filed.|
|CP518 and CP618 (in Spanish)||Final Notice – Return Delinquency||This is a final reminder notice when there is no record of a prior year(s) return filed.|
|CP501||Balance Due – 1st Notice||This notice is a reminder that there is an outstanding balance on a taxpayer’s accounts.|
|CP503||This notice is a reminder that there is an outstanding balance on a taxpayer’s accounts.||This notice is the second reminder that a there is an outstanding balance on a taxpayer’s accounts.|
|CP504||Final Balance Due Notice - 3rd Notice, Intent to Levy||The IRS sends this notice when a payment has not been received for an unpaid balance. This notice is a Notice of Intent to Levy (Internal Revenue Code Section 6331 (d)).|
|2802C||Withholding Compliance letter||This letter is mailed to taxpayers who have been identified as having under-withholding of Federal tax from their wages. This letter provides instructions to the taxpayer on how to properly correct their tax withholding.|
|CP259 and CP959 (in Spanish)||Return Delinquency||IRS sends this notice when there is no record of a prior year return being filed.|
|CP518 and CP618 (in Spanish)||Final Notice – Return Delinquency||This is a final reminder notice that we still have no record of a prior year tax return(s).|
The IRS acknowledged its backlog of several million original and amended returns, and said the notice pause should help avoid confusion for taxpayers and tax professionals.
The IRS says the automatic notices will remain on hold until the backlog is worked through. During this process, the agency says it will continue to assess the inventory of prior year returns to determine the appropriate time to resume the notices.
Notice issuance, stoppage overlap: The IRS noted that some taxpayers and tax professionals may still receive notices during the next few weeks until the stoppage is fully implemented.
Generally, there is no need to call or respond to the notice, according to the IRS announcement.
However, if a taxpayer or tax professional believes a notice is accurate, they should act to rectify the situation as quickly as possible. This will help stop accrual of interest and penalties.
The IRS also pointed out that it does not have the authority to stop all notices, since many are legally required to be issued within a certain timeframe. The IRS will continue to assess other changes and system modifications that the IRS may be able to implement to assist taxpayers on an array of issues. The IRS will continue to make information available to taxpayers throughout the filing season.
You also might find these items of interest:
- Talking Tax Forms
- Tax notices: A scary letter from the IRS
- Don't ignore that IRS letter and nine other tax notice tips
- IRS Taxpayer Assistance Centers to open for walk-in help on special Saturdays