23 February

Posted at 12:29h in by

Entering tax season 2022, the Internal Revenue Service still had a significant backlog of unprocessed tax returns and amended returns from previous years.  In some cases, computer generated notices related to these unprocessed returns have been going out, causing more confusion and frustration.  A large group of taxpayer advocacy organizations sent a letter to the IRS in January asking them to put a temporary stop to the notices until they can catch up.    

Now the IRS has responded, doing exactly that.  As of February 9th, 2022, the agency will stop sending many of the most common notices, including:

  • CP80-   Notice of unfiled tax return
  • CP501- Notice of amount due
  • CP504- Notice of intent to levy- final notice of tax due
  • CP518- Notice of unfiled tax return- final notice

 

This temporary suspension only stops some collection actions, and it doesn’t fix any underlying problems related to the notices.  It also doesn’t cover all potential IRS notices as some are legally required to be issued within a certain time frame. Once the IRS is caught up with its backlog, these notices will resume in force.  The suspension also doesn’t stop the interest and penalty clock, which keeps running by statute no matter what.  That means that when notices re-start later this year, taxpayers may notice a large increase of interest and penalties due.

To avoid these ballooning penalties, it’s best for taxpayers to stay on top of their unpaid tax accounts by setting up an IRS online account.  Unpaid tax amounts can be accessed on these accounts and are the most up-to-date information available.  With this data taxpayers can set up payment plans or make plans to contest the amounts due.  They can also check their filing history and fill in any missing years.  IRS online accounts have been having issues with identity verification, but they remain the best option for taxpayers and tax professionals in an age when less than 10% of callers can get through to the IRS and mail notices are suspended.

It’s hoped that the IRS will be able to hire more workers, but for now they are devoting everything they have to catching up.  When that happens, expect a flood of delinquent notices to hit mailboxes across the USA and be prepared.

For most companies, the process of managing notices is still very manual. It is handled through a combination of Excel and email or maybe even via a modified version of the companies’ CRM solution. Regardless the process is time consuming, error prone and often very costly and where industry specific solutions like NoticeNinja come into play.

NOTICENINJA is a next-generation compliance and workflow management solution can help streamline, standardize, and automate all aspects of notice compliance and administration saving both time, money, and resources.  Schedule a demo today! 

 

Written by Dan Connors

Edited by Laura McQuaig