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Eight scary automated IRS notices that are being suspended — for now

The agency has stopped mailing balance-due letters, but that doesn’t mean you’re off the hook for possible interest and penalties

(Daniel Acker/Bloomberg News)
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You’ve been trying to communicate with the IRS for months about your 2020 federal return, but your calls go unanswered and your mailed correspondence clearly sits unopened.

Then you receive a scary letter in the mail that says you haven’t filed your tax return, even though you did. Or, you’re warned that you have a tax debt. You don’t believe you owe it, but in an extreme case, the IRS could still move to levy your income, take money from your bank account or seize your property.

Welcome to Tax Season 2022. Because of a backlog of millions of returns, the IRS system has been spitting out automated notices — some prematurely.

Acknowledging it’s overwhelmed, the IRS announced it was suspending some notices on Jan. 27. But at the time it identified only one example — the CP80, which is sent to a taxpayer when the IRS has credited a payment but has no record of the tax return being filed.

Now we know more — nearly two weeks later. In a second statement, the IRS listed eight individual taxpayer notices that it’s stopping. They mostly relate to taxpayers the agency says have outstanding tax debt and unfiled tax returns. These automatic notices will be suspended until the backlog is worked through, the IRS said.

Three days after the 2022 tax season started, an overwhelmed IRS suspends some taxpayer notices

The agency listed eight notices, as well as the corresponding Spanish versions of the letters. The list also included two business notices that are being suspended temporarily. (By the IRS tally, that adds up to 15 notices since the start of 2022). Here they are:

CP59 and Spanish version, CP759 — You get this when the IRS doesn’t have a record of a prior year’s return having been filed.

CP516 and Spanish version, CP616 — This is the second notice of a delinquent return.

CP518 and Spanish version, CP618 — The final return delinquency notice.

CP501 — This is a reminder that you have an outstanding balance due.

CP503 — This is the second reminder that you have an outstanding balance.

CP504 — This is the third notice that also indicates the intent by the IRS to levy your income and bank accounts and seize property if you don’t immediately pay the amount due.

2802C — Taxpayers receive this notice when the IRS has determined that your withholding isn’t enough. Ignore this letter and the IRS will follow up by issuing a “lock-in letter” that instructs your employer to increase your withholding rate.

CP80 — This notice is sent when the IRS has credited payments to a taxpayer’s account but hasn’t received a return for that tax period. Many taxpayers complain that the IRS cashed checks that were attached to returns that are probably in the unprocessed pile.

The business notices being stopped are CP259 (CP959 in Spanish) and CP518 (CP618 in Spanish). Both of these notices — first and second — involve returns that the IRS doesn’t have a record of being filed.

“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 American Institute of Certified Public Accountants (AICPA) said in a statement.

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Because the notices are automated, some taxpayers and tax professionals may still receive letters during the next few weeks, the IRS said.

The pandemic has caused a massive backlog at the IRS. The Post's Michelle Singletary explains how your taxes might be impacted this year. (Video: Amber Ferguson/The Washington Post)

So, what should you do?

“Generally, there is no need to call or respond to the notice as the IRS continues to process prior year tax returns as quickly as possible,” the agency said.

For many people, failing to get a notice will end up costing them more money, because they may assume it means a reprieve from paying taxes due. It does not — a point that can’t be emphasized enough.

If you owe the IRS, the suspension of a notice does not equal a suspension of payment, warned National Taxpayer Advocate Erin M. Collins.

If they believe they owe some or all of the tax, they should determine what they can pay, make that payment, stop the running of the interest and continue to try to work with the IRS to resolve the issue,” Collins said. “We just want to make sure taxpayers are not surprised a year down the road that the interest continued to accrue.”

If you owe the IRS and didn’t file your tax return on time, you could be facing penalties for failure to file and a failure to pay. The IRS points out that interest and some penalty charges continue to be added to the amount you owe until the balance is paid in full, and that interest compounds daily.

“In not sending notices, taxpayers who should actually be receiving them may not be,” said Eric Bronnenkant, head of tax for the online financial adviser Betterment. “If a taxpayer believes they have an unfiled tax return, has a balance due or is aware of another issue, they should still try to get these issues resolved. The absence of a notice does not mean an issue has been resolved.”

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Meanwhile, the AICPA has been pressing the IRS to extend holds on taxpayer accounts until a resolution is reached. This will prevent a notice from escalating to collection efforts while there are still a massive number of unprocessed returns that need to be cleared.

“If there is a hold on your account and the IRS hasn’t resolved the dispute, then that hold should be able to stay on until the problem is resolved,” said Melanie Lauridsen, senior manager for tax policy and advocacy with the AICPA.

If you get a notice and you don’t owe, or you have proof you filed your return on time, just hang tight. There isn’t much you can do but wait for the IRS to catch up on the backlog.

“The IRS is first in, first out,” Collins said. “So if you continue sending subsequent correspondence, it’s not going to get anyone’s attention quicker. You’ll go to the bottom of the pile. I know people do not want to hear this, but you’re just going to have to be patient.”