Turning the calendar to 2021 was a breath of fresh air. Finally, 2020 was in the rearview mirror with the new year holding great promise. Sadly, the pandemic continues to create challenges in the early months of 2021 for everyone, including the Internal Revenue Service (IRS). One challenge the IRS is facing is the backlog of correspondence. This includes the processing of tax returns that were created by months of remote work and social distancing within the various offices of the IRS.
According to a January 2021 article posted to the IRS website, more than six million individual tax returns were awaiting processing as of December 25, 2020. Further, the IRS has been slow to process payments received through the mail from October through December 2020. These processing delays have created a wealth of IRS Notices showing non-payment of 2019 tax liabilities.
Receiving an IRS Notice is disconcerting and certainly causes frustration and undue stress. However, there appears to be a light at the end of the tunnel. The IRS has stated that they are now processing mail and payments within normal timeframes and have made a significant dent in the backlogged tax returns.
So, what does this mean for you?
The extended July 15, 2020 filing date for 2019 personal tax returns started the processing delay. Things only became worse with the tax returns filed by or before the second extended due date of October 15, 2020. The processing backlog was further compounded when the returns were paper filed.
For those taxpayers who mailed their tax payments or estimated payments to the IRS, a two-fold delay is occurring. There is a delay in the processing and then posting of payments to taxpayers’ accounts. To address these problems, the IRS is currently rerouting tax returns and taxpayer correspondence to locations where additional staff are available.
What should you do if you receive an IRS notice?
Contact a member of your PYA tax team. We will assist you in navigating the IRS processing delay. We are staying abreast of the latest information from the IRS regarding their delays in processing and posting. Because of the continued IRS processing lag, we are no longer responding to the IRS via mail. Instead, with a signed Power of Attorney, we will FAX or call the IRS, submitting a timely response to your individual tax issue.
According to the IRS, the documentation required for evidence and the timeframe for resolution will vary based on the type of issue. For example, our experience with the IRS addressing a notice of non-payment includes submitting proof of payment and then waiting a few weeks for the IRS to correct the taxpayer’s account.
During this waiting period, which can take six to eight weeks, a taxpayer might receive another IRS notice, escalating the matter to the next level. However, the IRS is asking that we do not submit documentation more than once or through multiple channels.
Rest assured, your notice will be resolved, but it may take a healthy dose of patience before receiving the needed resolution.
If you have questions regarding an IRS Notice or would like assistance with tax preparation, planning, or submission, please contact a PYA executive below at (800) 270-9629.