On August 13, 2020, the IRS issued an update to its COVID-19 operations document. One matter of particular interest to several PYA clients relates to those taxpayers that have recently mailed a check (either with or without a tax return) to the IRS. According to the updated document, those payments likely remain unopened in the backlog of mail the IRS is processing. Unfortunately, the IRS continues to generate automated notices to taxpayers for non-payment, even if the payment was timely submitted, but remains unprocessed. Several of our clients have begun receiving these notices, so we want to provide a little clarity.
What the IRS Is Doing
The IRS continues to work through the backlog of mail and indicates it will post payments as the date payment was received, not the date the payment was processed. Further, the IRS will provide relief from any bad check penalties for any dishonored checks received between March 1 and July 15 due to IRS processing delays, but it is quick to point out that interest and penalties may still apply.
What Taxpayers Need to Do
Should a taxpayer receive a notice of underpayment, the IRS advises the taxpayer NOT to cancel the check previously submitted. In addition, the IRS suggests waiting to contact the agency about any pending payments due to high call volumes. The best course of action at this time may be to wait for the IRS to get the backlog cleared.
Other Items Discussed in the Updated Operations Document
In addition to the payment notices, the IRS is working through backlogs in paper-filed returns, residency certifications, and other taxpayer correspondence. The IRS is also limited in its ability to provide live assistance over the phone. Because of the significance of the backlog, and the need for the IRS to maintain reduced staff levels at this time, delays in processing and delivery of necessary responses should be expected.
If you want to read more about the IRS Operational Responses to the COVID-19 pandemic, view the latest update here. Should you have any additional concerns, contact a PYA executive below at (800) 270-9629.