One of the most troublesome issues with 2020 individual tax forms involved the first two economic stimulus payments.  Line 30 of that year’s form gives taxpayers a chance to claim that they didn’t receive the proper stimulus amounts and request more from the IRS.  The problem for tax preparers was that there was no central location where these amounts could be easily verified, and people’s memories and bank records were faulty and incomplete.

This has produced millions of IRS notices over the summer, all denying the line 30 amounts, most commonly because the missing stimulus payments weren’t truly missing.  These notices neglected to mention that taxpayers had a right to appeal this determination, resulting in Letter 6470- another notice that has gone out to taxpayers letting them know about their right to appeal within 60 days.  This letter has caused much confusion, in some cases arriving before the CP-11, or denial, notice.  Some have seen that the letter mentions that “we may forward your case for audit,” which can then cause anxiety and calls to tax professionals.

Letter 6470 is a lengthy, poorly worded notice, but the bottom line is that if your client disagrees with their determination on the missing stimulus payments, they can appeal by calling a toll-free number or responding by mail, but they may have to provide proof.  If the credit disallowance results in an amount due, that amount should be paid while the appeal is ongoing.  All tax pros need to be aware of these letters and notices and have a system in place to help their clients deal with the confusion, perhaps contacting them proactively to reassure them of their rights.  Form 8821 or the new IRS tax pro accounts can help alert professionals to these and other notices as they arise.


By Dan Connors

Dan Connors