Don't Mess With Taxes

The only thing worse than getting a notice from the Internal Revenue Service, is getting a wrong one.

And the absolutely worst IRS communication scenario is getting a mailing that says you owe Uncle Sam when you are sure you paid your tax bill on time.

That happened recently to some taxpayers.

Now the IRS is trying to ease these individuals’ concerns.

Wrong automatically issued notices: “The IRS is aware that some taxpayers are receiving CP14 (Balance Due, No Math Error) notices indicating a balance due even though payments were made with their 2023 tax return,” said the agency in a statement issued this week.

The problem likely comes because CP14 mailings typically are issued automatically. If taxpayer data isn’t up to date in the IRS system, it still kicks them out based on the incomplete information.

This is not the first time automation has gone awry for the IRS.

Last year, Californians who were given more time to file because they were in major disaster areas got erroneous IRS tax-due notices.

Incorrect notices went out in 2022 to some married couples due to confusion about tax payments made, in full and on time, via the taxpayers’ Online Account. The issue was related to the payments being made by the spouse whose name was listed second on the return.

And during the COVID-19 pandemic, IRS office closures resulted in massive paperwork backlogs. That meant timely filed data didn’t get entered into the IRS’ system, leading to the automatic mailing of 260,000 failure-to-file notices, many of which the agency admitted were wrong.

Based on this history, this latest batch of erroneous notices probably won’t be the last.

Compliant filers affected: This recent miscommunication affects both taxpayers who paid electronically or by check when they filed their returns earlier this year.

It seems that the IRS’ system may show these accounts as pending, even though the filers’ payments cleared their bank accounts.

“The notice may have been initiated before the payment was processed on the account, or the payment may have been processed but contained errors and requires additional handling to address the error before updating the tax account,” according to the IRS.

No taxpayer action needed: The IRS asks taxpayers who receive a balance due notice, but who have paid, electronically or by check, the tax they owed in full and on time, to be patient.

The affected filers, said the IRS, “should not respond to the notice at this time.”

The agency said it is researching the matter, and “will provide an update as soon as possible.”

Any penalties and interest that are indicated in the notices will be automatically adjusted when the affected filers’ payment(s) are applied correctly by the IRS, according to the agency’s statement.

“For affected taxpayers, the IRS apologizes for the inconvenience this delay in processing your payment has caused,” added the IRS.

Let me add one other piece of advice for those who got a wrong notice. If you hire a tax professional to file your return, let that preparer know of the notice. Then file it with your copy of your correct and complete 2023 tax return.

You also might find these items of interest:

• IRS tax notices do's and don'ts
• IRS receives 1 millionth uploaded tax document
• IRS redesigning tax notices so they're more intelligible
• IRS accepting uploaded docs to resolve certain tax notices

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