For example, imagine filing and paying your taxes last year only to receive a letter from the IRS months later that says otherwise.
Many taxpayers are finding that out the hard way this year, thanks to IRS automated notices.
But don’t freak out if you have one. Most likely, the IRS hasn’t received your previous submissions. In part, that’s because it’s dealing with a two-year-old mountain of returns and correspondence. Covid-19 economic impact payments and other financial Covid-19 relief had to be delivered during this time, while the agency was trying to protect its own employees from Covid.
Fortunately, you won’t be getting any more notices in the foreseeable future. As a result of the pandemic-induced backlog, the Internal Revenue Service announced this week that it will temporarily suspend the issuance of more than a dozen different types of automated notices indicating unpaid balances, unfiled returns, and other deficiencies. [This is a list of notices which are suspended.]
Automated notices typically require a response from you — for example, by filing a return, making a payment, providing requested data or explaining why the notice is incorrect.
However, the IRS is currently too busy to respond in a timely manner.
According to the National Taxpayer Advocate, the IRS took an average of 199 days last year to process 6.2 million responses from taxpayers to IRS-proposed adjustments on their returns.
As a certified tax professional, Donna Byrne was sent a notice that claimed she had not filed her 2019 tax return, despite the fact that she had. The fact that you’re aware of your actions “drives you absolutely crazy.”
And trying to get in touch with an IRS representative over the phone can feel like a futile endeavour: Currently, the IRS receives 1,500 calls per second, according to a letter from the agency to Congress.
According to the American Institute of CPAs, this week’s announcement is a good first step, but more needs to be done. Along with other professional tax organisations, the AICPA has been urging the IRS to implement four short-term recommendations, one of which is the suspension of IRS notice requirements.
“We are encouraged by recent actions taken by the IRS to suspend more automated notices and pleased to know that the IRS is listening and acting. Taxpayers, practitioners and IRS will benefit from reducing unnecessary contact, such as erroneous notices or warnings of levy, and provide much-needed relief during an already stressful and overwhelming tax season,” the AICPA said in a statement Thursday.
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What To Do If You’ve Already Received An Automated Message
According to the IRS, there is no estimate on how many tax filers have already received the automated notices in the past few months. A few notices may still be on their way to tax filers, but this was noted.
There’s no need to call or respond to the letter if you’ve already received it or will in the near future, the IRS says in a statement. The agency says it’s processing prior year tax returns as quickly as possible. As long as you or your tax preparer are confident of its accuracy, you should not be concerned about the notice. According to the IRS: “act to rectify the situation in order to protect taxpayer welfare.”
The vice president of taxation for the AICPA, Edward Karl, recommends responding to both situations. It is important that the letter tells you where to send your response back.
As a result, he stated: “When the [automatic notification] machine is turned back on, you may receive additional notifications. Moreover, you’ll want to do everything you can to prevent it from happening.”
It’s because, as Karl explained, the IRS may be able to take money from your wages or bank account if they believe you owe more in taxes and penalties and you haven’t responded.