You got an IRS notice, but the tax check was mailed. Now what?

Sept. 3, 2020

This paid piece is sponsored by Eide Bailly LLP.

Most taxpayers breathed a sigh of relief when the due date for the filing and payment of the tax due on their 2019 income tax return was moved to July 15, 2020. After all, they had plenty of extra time since the April 15 due date was moved.

But now, many taxpayers are receiving late notices and tax payment-due letters in the mail. The problem? It appears the Internal Revenue Service may have a problem processing all those July 15 payments that were made by check.

Using a date of Aug. 17, 2020, the IRS sent out over 5 million CP14 notices. And, by any count, that’s a lot for one day.

IRS temporarily stops mailing notices to taxpayers with balances due

To avoid any further confusion for taxpayers who previously received a CP14 and sent a payment to the IRS, the IRS has temporarily suspended the mailing of three notices: the CP501, the CP503 and the CP504.

These notices are sent automatically to taxpayers who have a balance due on their taxes. The IRS is taking this step to avoid confusion for taxpayers who previously received a balance-due notice — the CP14 — and mailed a payment to the IRS; however, that payment may still be unopened. In addition, to provide fair and equitable treatment, the IRS also is providing relief from bad-check penalties for dishonored checks the agency received from March 1 to July 15 because of delays in IRS processing.

As the IRS works to stop these mailings at processing centers, some taxpayers and tax professionals may still receive these notices during the next few weeks because of the delivery of existing mailings. Click here for information.

What is a CP14 notice?

A CP14 notice is a computer-generated form used by the IRS to tell taxpayers they have a tax payment due. It also is used for other things the IRS believes are important for taxpayers to know about the payment or return for which the tax is due.

The Aug. 17 CP14 notice told taxpayers that the IRS had received their tax return, but the tax shown as due, according to the IRS, was still due.

Why am I getting a tax payment-due notification?

The reason for the IRS computer generating the 5 million recent CP14 notices seems to be that the IRS has been unable to timely process payments. Why? It appears the delay in both delivery and processing is caused by the COVID-19 shutdowns.

If you received one of the millions of CP14 notices, the IRS is aware. The disconnect caused by payments not being processed into the IRS computer system created the automatic distribution of the CP14 notices.

What should I do with the tax payment-due notification?

The IRS suggests the following:

  • Allow time for the payments to be input and processed. When that happens, a revised tax notice will be issued, likely curing the issue.
  • Do not place a stop payment on the tax payment check. That will only serve to bring the potential of interest and penalties into play since the check would not be processed.

Checks received by the IRS will be posted to a taxpayer’s account based on the “mailbox rule.”

The mailbox rule basically says that a return, a claim for refund or a payment due is considered timely filed or paid if deposited into the hands of the U.S. Postal System in an envelope or other acceptable packaging, properly addressed with the required postage paid and the date of the postmark falls on or before the due date of the item being submitted. If all this is properly done, the postmark date is deemed the date of delivery or payment. Returns or payments filed outside the United States or using a designated private delivery service also can make use of the mailbox rule.

Stay up to date when your tax payment goes through

Receiving a notice from the IRS usually causes a taxpayer a great amount of anxiety. However, for this particular issue, there is a solution. If you made your required payment, the situation should fix itself once the IRS has had time to properly process tax payments. If you didn’t make the proper payment when due, the IRS will require a response to the CP14 notification and payment of what is owed.

Tax planning and preparation can be confusing and complex. Click here for help. 

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