In the wake of COVID-19, the Internal Revenue Service (IRS) closed offices and reduced staffing levels. You may be feeling the effects of these closures if you recently received a late payment notice. Due to an aggressive backlog, the IRS may or may not have cashed your check yet. If they have cashed your check, an automated tax notice may have been issued before your account was updated. If you filed an amended return around the July 15 deadline, or another paper filed return or response, the IRS may not have processed or reviewed those documents yet.
Fewer staff members and slower processing timelines are causing the large backlog of unprocessed mail, including the check you mailed in for the delayed tax deadline, July 15, 2020. The IRS released guidance providing relief for taxpayers receiving alarming notices and encouraged affected individuals to avoid canceling their checks. It can take up to two weeks after a check is processed for the payment to be reflected on the taxpayer’s account. In many cases across the nation, notices are being created and mailed while the update to the account is still pending.
To help you find peace of mind as the IRS works to process payments and excess mail, our experts have compiled a list of what you can do to resolve these notices.
If the IRS has not yet cashed your tax payment:
- Double-check your records to make sure that you mailed your check. For many clients, we completed their return well in advance of the July 15 deadline and the check and voucher may still need to be mailed.
- If you mailed your check with a tracking number, check your tracking number to confirm that the IRS has indeed received your mailed check. Print or save a copy for your records.
- To avoid being charged penalties and interest, do not have your bank cancel the check. If the IRS has your check, they will process it and apply it to your account.
If the IRS has cashed your tax payment, but it is not currently reflected on your tax notice:
- Review your tax notice date and the date your check was cashed, if the notice was issued within two weeks of your check being cashed, the IRS should self-correct this issue as they catch up on processing payments and taxpayer accounts.
- If you mailed your check with a tracking number, save or print a copy of the tracking history for your records.
- Save or print a copy of the processed check from your bank’s online website. It is important to capture both sides of the check; the backside of the check will contain routing information to assist the IRS in locating your check within the system.
If you filed a paper tax return, response to a notice, or other paper filed items with the IRS:
- We will need to wait until the IRS clears its backlog.
- The IRS reviews all incoming items on a first-come-first-serve basis. We cannot rush your notice to the front of the line.
When to contact your Aldrich Advisor for help:
- If your payment amount is small, it will be best to wait until next month before taking action. We expect the IRS to self-correct many of these issues in due course. You will not receive a notice unless additional payments are required.
- If your payment is large or if there are other items addressed in the notice, we can help you take action to contact the IRS. Please contact your Aldrich Advisor to discuss the next steps for your specific situation.
Aldrich is Here to Support You
The entire Aldrich team is monitoring all IRS updates and guidance. We’ll be updating our COVID-19 Resource Center diligently to keep you apprised of changes as they happen. If you have any questions about a late payment notice, reach out to your Aldrich Advisor.
This article was written with the most current information as of August 19, 2020. Please check back for future updates, when further guidance and eligibility are released.
Meet the Author
Matthew Kanter, CPA, CFP®
Aldrich CPAs + Advisors LLP
Matthew Kanter joined the firm in 2017 with five years of experience working with individuals and small businesses at a small accounting firm in the Portland, Oregon area. Here at Aldrich, Matthew assists with tax compliance and planning for individuals, high net-worth clients, and estates and trusts. Matthew enjoys empowering his clients to focus on... Read more Matthew Kanter, CPA, CFP®
- Certified Public Accountant
- High-net-worth individuals
- Strategic tax planning and compliance