IRS identifies suspended taxpayer notices

The IRS announced in a press release on Wednesday the letters and notices it will not send to taxpayers as it works through its backlog of unprocessed returns from the previous year.

In a Jan. 27 announcement, the Service said it was suspending certain automated letters and notices without specifically identifying them, saying only that they include, for example, those for which it has received payment but has no record of the corresponding tax return. been filed. The IRS said it was doing this in recognition of the possibility that the return was indeed filed but not yet processed.

On February 9, the IRS identified the letters and notices it is suspending and described their function. They include notices of unfiled returns and outstanding balances generally, including a final notice of outstanding balance and intent to draw.

In a statement released Thursday, the AICPA called the announcement a welcome step.

“We are encouraged by the recent steps taken by the IRS to suspend more automated notices and happy to know that the IRS is listening and taking action,” the AICPA said. “Taxpayers, practitioners, and the IRS will benefit from the reduction in unnecessary contact, such as erroneous notices or levy warnings, and provide much-needed relief during an already stressful and overwhelming tax season.”

The AICPA said it continues to urge the IRS to consider providing further relief, however, until the Service “significantly and meaningfully” reduces its backlog.

These measures should include longer account holds, easier relief on reasonable grounds, and expanded safe harbors for payments, which are among the four recommendations of the Tax Professionals United for Taxpayer Relief Coalition, which the AICPA endorses. part.

The IRS has identified the suspended letters and notices as follows:

  • CP80, notice of an unfiled income tax return. The IRS sends it when it has credited payments or other credits to the taxpayer’s account but has not received a tax return for the tax period.
  • CP59, income tax return not filed, first notice. The IRS sends it when it has no record of filing a return from the previous year. The Spanish version, CP759, is included.
  • CP516, unfiled tax return, second opinion. This is a request for information on an overdue return for which there is no record of filing. The Spanish version, CP616, is included.
  • CP518, final notice — delay in return. The Spanish version, CP618, is included.
  • CP501, balance due, first notice. This letter is a reminder of an outstanding balance on the taxpayer’s accounts.
  • CP503, balance due, second opinion.
  • CP504 balance due, third and final notice. This is also a notice of intent to debit.
  • 2802C, withholding compliance letter. This letter notifies taxpayers that the IRS has identified as having under withheld taxes from their wages, with instructions on correcting their withholding amount.
  • CP259, corporate return delay. The IRS has no record of a previous year’s return having been filed. The Spanish version, CP959, is included.
  • CP518, last business return unpaid notice. The Spanish version, CP618, is included.

How long letters and notices will be suspended or when the backlog can be considered cleared enough to resume them remains unclear. The Feb. 9 press release said the IRS “will continue to assess the inventory of prior year returns to determine when it is appropriate” to begin sending them again. And there was no question of relieving the taxpayers of their obligation to file returns or pay taxes which are the subject of the letters and notices, if these returns and taxes are in fact unfiled and unpaid.

The IRS has encouraged taxpayers who believe they have such an unfulfilled obligation to honor it. But if they receive a notice or letter that they think is incorrect because they filed the return or made the payment, they don’t need to take any further action. Despite the suspension, some erroneous letters and notices may still be sent, warns the IRS.

The IRS also reiterated its determination to reduce its backlog, even as the current filing season places renewed demands on its processing functions. In a Feb. 2 internal memo, IRS Commissioner Charles Rettig called on “everyone on deck” to bolster the Service’s account management function, temporarily reassigning staff there.

During testimony before the House Ways and Means Committee on Tuesday, National Taxpayers’ Advocate Erin Collins noted that as of the end of December, the IRS had a backlog of 6 million unprocessed individual returns and 2.3 million modified individual declarations not processed. In addition, more than 2 million Form 941s, Employer’s Quarterly Federal Income Tax Return, and its modified version was not processed. Many of these included claims from the employer’s withholding credit pandemic emergency relief provision.

About 17 million original returns were filed last year on paper, which took the IRS up to 10 months to process, Collins said. They include about 3 million returns awaiting scanning and manual transcription into IRS computer systems, she said.

— To comment on this article or suggest an idea for another article, contact Paul Bonner at [email protected].

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