September 23, 2020

Though most people dread receiving mail from the Internal Revenue Service, those letters often provide important information to taxpayers who may be delinquent on their payments. Failure to open and respond in a timely fashion to IRS notices can lead to late fees, fines and a host of other troubles.

Last month, the IRS made a highly unusual announcement. Due to shutdowns during COVID-19, the agency has been buried in a mountain of unopened mail. That includes mail from taxpayers including checks to make tax payments. With those checks unprocessed, taxpayers may receive a notice of non-payment that could lead to understandable confusion and panic.

With that in mind, the IRS is temporarily suspending sending out three different notices to taxpayers. Those notices are:

Form CP501: This is a standard notice informing taxpayers of a balance owed on one or more tax accounts.

Form CP503: This notice advises taxpayers the IRS has not received a response to a previous mailing, and that there is still an outstanding balance.

Form CP504: This is the harshest of the notices. It warns taxpayers that due to an unpaid balance, if full payment is not received immediately, the IRS will seize the taxpayer’s state income tax refund and apply the refund to the amount owed.

In announcing this unusual move, the agency said:

 . . .  these payments in the unopened mail will be posted and credited on the date the IRS  receives  them – rather than the date the agency opened and processed them. The IRS reminds taxpayers in this situation they should not cancel their checks and should ensure funds continue to be available so the IRS can process them to avoid potential penalties and interest. To provide fair and equitable treatment, the IRS is also providing relief from bad check penalties for dishonored checks the agency received between March 1 and July 15 due to delays in this IRS processing.

The agency has not offered a date when mailing of notices will resume. Until then, the IRS recommends taxpayers make tax payments online at https://www.irs.gov/payments.

Attorney John F. Leone has practiced for more than 25 years with a focus on helping people with their retirement plans, wills, estate planning, and estate and trust administration. He can be reached at Gross Shuman, P.C. by calling 716-854-4300 ext. 243 or [email protected].