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IRS again issues potentially wrong tax-due notices

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Photo by Mikhail Nilov

Just when you thought it was safe to go to your mailbox, the tax bogeyman is back.

The Internal Revenue Service says it has — again — sent out some confusing, and potentially incorrect tax notices. This time it's balance due notices.

This is getting to be a bad habit.

Earlier this year, taxpayers who had filed and paid taxes while the IRS was operating under COVID-19 pandemic constraints received automatically issued notices that the IRS couldn't find their 1040 forms. The problem then was due to the millions of backlogged paper returns that stacked up when the IRS closed offices in 2020 and 2021 as a health precaution. IRS staff was still working on some of those old paper filings this June.

In 2021, the agency IRS mailed 260,000 failure-to-file notices, many of which it admitted were wrong.

This time, though, more current taxes are at issue.

The CP14 balance due notices going out now appear to mostly involve married couples who filed a 2021 joint return. The IRS hasn't been able to match up those returns with the tax due shown on them.

Spouse payment discrepancies: "The IRS is aware that some payments made for 2021 tax returns have not been correctly applied to joint taxpayer accounts, and these taxpayers are receiving erroneous balance due notices (CP-14 notices) or notices showing the incorrect amount," the IRS said in a statement about the errant mailings.

Generally, added the IRS, the payments in question are ones made by the spouse, that is, the second taxpayer listed on the couple's married filing jointly return. These payments were submitted through the taxpayers' Online Account.

The IRS said that in when certain payments are processed, its system's programming usually does not move the payment to the married filing jointly account when it falls into one of these three situations:

  • The payment is not electronic and is made by the secondary spouse.

  • The payment is made electronically, but by the secondary spouse, and posts before the joint return indicator is present to identify the primary taxpayer.

  • The payment is made by the secondary spouse using the Online Account (OLA) Make a Payment functionality.

Got that? Me neither. These explanations are, according to the IRS, "additional information for tax professionals." So any tax pros out there fluent in IRS Taxglish, feel free to chime in here.

My bottom-line translation, however, is that the tax agency hasn't yet trued-up the tax accounts of some married couples who did file and pay their 2021 returns.

No numbers from the IRS: The IRS notice doesn't elaborate on just how many people/couples are affected by its latest mailing of errant notices.

What I do know, though, is that I'm going to be looking askance at my curbside snail box for a while. The hubby and I file jointly, and this year, like all the many (many) previous ones, I make the payments, usually electronically, after e-filing our 1040.

We also have different surnames, which in addition to baffling some of my in-laws, could pose a problem. But our Electronic Federal Tax Payment System (EFTPS) account that I use is in his name because, well, the patriarchy. And the fact that he usually earned more than me, again, the patriarchy.

No need to respond … yet: The IRS says if any of us — and, yes, some taxpayers "outside this [married filing jointly] group" also may be affected — get a CP14 and we know we filed and paid on time, don't act. Or over-react. Yet.

Easy for the IRS to say.

Still, the agency assures us that, despite the notice, there's no need to take immediate action or call the agency. Instead, the IRS statement says:

Taxpayers who receive a notice but paid the tax they owed in full and on time, electronically or by check, should not respond to the notice at this time. The IRS is researching the matter and will provide an update as soon as possible. Taxpayers who paid only part of the tax reported due on their 2021 joint return, should pay the remaining balance or follow instructions on the notice to enter into an installment agreement or request additional collection alternatives. Taxpayers can ensure that their payment is on their account by checking Online Account under the SSN that made the payment. Note that any assessed penalties and interest will be automatically adjusted when the payment(s) are applied correctly.

So, per the IRS, sit tight. When Uncle Sam's tax collector does have more, and hopefully clearer, details about this confusing notice situation, I'll let you know here on the ol' blog.

In the meantime, you also might want to call your U.S. Senators and Representative and urge them to pass the Inflation Reduction Act of 2022. While most of the bill's $79 billion for the IRS is for enforcement, there are substantial funds for systems modernization, operations support, and taxpayer services.

We definitely could use some of that upgrade computers and improved service right now.

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Comments

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Kay

Thanks, Aurelia, for the on-the-field report. Kudos to you for dealing not only with the IRS and tax code, but also clients who too-often misdirect tax anger toward those trying to help them. Kay

Aurelia Weems

I am a CPA and we have been having the spouse make the payment against their account if they are the one picking up the return since the IRS split the accounts for joint returns. We haven't had any problems with this until the 2021 tax year. I have talked to several agents while trying to resolve the issue on the payments and at first they said that it takes a few weeks after the returns are filed to combine the accounts for the joint return. After several months it was obvious they were not combining the accounts any time soon. Many of my clients did blame me for this error on their tax account with the payment not being applied against the joint tax return. I am glad they have finally brought this issue out in the open so that preparers are not blamed especially when the website tells the secondary taxpayer to use their own information. The other issue is that if the secondary spouse is incurring the tax liability and are making estimated tax payments on their own account, and they get divorced before the end of the year, the tax payments are on the correct account.

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