Did you receive a notice from the IRS advising you that you owe money for your 2019 tax return? Had you already paid the amount being requested? Unfortunately you are not alone.
The IRS is currently working through an enormous backlog of mail due to the Coronavirus shutdown. When the IRS first reopened back in June, it was estimated that the backlog of unopened mail stood at close to 11 million. Imagine a government agency having to process that backlog on top of all of the tax returns and payments which were mailed for the July 15 deadline.
So, what should you do? If your check has cleared the bank, it is most likely a case of the tax return posting to the IRS system before your payment did so. These notices are automated so there is no one checking to be sure they are correct before they go out the door. We recommend getting a copy of the cancelled check from your bank and verifying that the endorsement on the reverse side of the check reflects the proper tax year and tax account. Your DunlapSLK team member can help verify this for you.
If your check has not cleared the bank, don’t panic, your check is most likely in that giant pile of backlogged mail. The IRS is working the backlog on a first in, first out basis, so it may be awhile before you see your check clear. IRS employees are instructed to post the payment to your account based on the postmark date, not the date they finally process it. As such, you will not be liable for any interest or penalties on the late posting of your payment. We are also recommending you write to the IRS regarding the missing payment. With the backlog, this letter will probably not be processed for some time, however you will at least be on record as having attempted to address the problem. Your DunlapSLK team member can assist you here as well.
Knowing this is a systemic issue, Rep. Richard Neal, D-Massachusetts, who chairs the tax-writing House Ways and Means Committee, has asked the IRS to stop mailing notices to taxpayers who have been affected by the mail backlog.
We know a tax notice of any kind can cause unwanted stress. We’re here to help.
Speaking of the IRS…you may be receiving interest on your refund.
Did you recently receive a direct deposit or check from the IRS for a small dollar amount? The IRS began sending taxpayers who received a refund of their 2019 taxes, interest on those refunds. These payments are being sent separately from the actual refund. As a result of the disaster declaration related to COVID-19 and the extension of the tax due date, the IRS was required to pay interest on any refunds issued for tax returns filed between April 16 and July 15. The average interest payment is around $18. Don’t forget to report this interest income on your 2020 tax return.