Multiple clients of ours filed tax returns near the July 15th deadline and mailed payments to the IRS. And, as usual, these clients received IRS CP14 notices stating they hadn’t paid their taxes (when they had). What should they do?
First, ignoring an IRS notice is generally not a good idea. IRS notices do not improve with age.
The simplest thing to do for individuals is to attempt to view your tax record online. If you can, view your Account Transcript for 2019. If it shows a $0 balance, the IRS has corrected the issue and you can ignore the CP14 notice.
(I have to use “attempt” because the IRS online system works for only half of those who try. For example, the system works for me but does not work for my business partner.)
But what if your check has cleared and the payment hasn’t been noted? Get copies of the front and back of the cleared check. With that, the IRS can trace where the check went. I’ve seen checks applied to the wrong account and the wrong tax year. If your check cleared more than two weeks ago, there’s a problem and you, or your tax professional (if you have authorized him or her) will need to call the IRS and resolve the issue. (If the check cleared in the last two weeks, you need to give the IRS a little more time to update their records.) This can usually be done over the phone.
Three issues this year have made matters worse. First, IRS computers are programmed to allow an extra “cycle” (to allow payments received to be entered into IRS computers) before sending out CP14 notices after April 15th. It appears the IRS hasn’t changed their programming for the July 15th due date, so there’s no extra cycle after July 15th.
Second, because of Covid mail has slowed. One of my clients mailed his payment (using certified mail) on July 14th from Reno; it wasn’t received in Cincinnati until July 23rd. In the past, that letter would take two or three days; this year, it took nine.
The third issue is that at least for Nevadans, we’re no longer mailing payments to San Francisco. This year Nevada, Oregon, and Arizona residents send their payments to Cincinnati. That’s much further away with corresponding later delivery dates. That hasn’t helped.
Individuals have it quite good: Things are far, far worse for businesses, trusts/estates, and anyone else making payments directly to IRS Service Centers. Simply put, the IRS has a backlog of over 10 million pieces of mail to open. Many of those include checks. The IRS knows of the issue, but until this backlog is resolved (and that will take months), there’s little that can be done. The IRS issued a statement acknowledging this issue:
Pending Check Payments and Payment Notices: If a taxpayer mailed a check (either with or without a tax return), it may still be unopened in the backlog of mail the IRS is processing due to COVID-19. Any payments will be posted as the date we received them rather than the date the agency processed them. To avoid penalties and interest, taxpayers should not cancel their checks and should ensure funds continue to be available so the IRS can process them.
To provide fair and equitable treatment, the IRS is 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. However, interest and penalties may still apply.
Due to high call volumes, the IRS suggests waiting to contact the agency about any unprocessed paper payments still pending. See www.irs.gov/payments for options to make payments other than by mail.
So if you get a notice alleging you didn’t pay and you did, relax. This is probably a timing issue that will self-resolve. And a reminder that whenever you send something to a tax agency, use certified mail. This gives you proof you mailed it on the date noted. If that was done timely, the IRS will consider your action timely even if the IRS untimely opens the mail.
Tags: CP14