The Internal Revenue Service is expected to soon resume sending automated collection notices, which it suspended last year while it tried to catch up on the backlog of unprocessed tax returns.
Darren Guillott, IRS deputy commissioner for collection and operations support, reportedly announced at an American Bar Association conference earlier this month that automatic collection notices will be updated. Thomson Reuters. About 5 million to 8 million taxpayers will begin receiving notices that they owe money to the IRS in late May and early June.
The IRS later clarified that its CP14 notifications never stopped entirely during the COVID-19 pandemic, and the projected figure refers to taxpayers who filed a tax year return and will receive a proper balance notification after tax season.
In February 2022, the IRS announced He was holding off on sending about a dozen other notices to get him to file millions of unprocessed tax returns from this tax season and the year before. These included CP80 for non-compliant tax returns; CP501, CP503 and CP504 first, second and final balance notifications (the third of which is the intention to pay); and the 2802C Detention Compliance Letter, as well as the Spanish-language CP259, CP518, CP618, and CP959 Return Offense Notices.
The IRS mostly now captures last year’s unprocessed returns, albeit recently reports that he had 4.2 million unprocessed tax returns as of May 13, including 2022 tax returns, 2021 returns that needed correction and late-filed prior-year returns.
The National Association of Tax Professionals is urging taxpayers and tax preparers to prepare for an onslaught of new notices.
“The IRS is updating as usual now that they’re getting a lot of backlog issues,” said Tom O’Saben, director of government relations and tax content at NATP. “People should not ignore an IRS notice. As the notices get closer and closer, you are facing the possibility of levies on your bank account or liens against them. The first thing I would advise taxpayers to do, if they can, is to set up an online account with the IRS It’s about a 20-minute process, but then they see exactly what the IRS sees.”
Taxpayers have reported problems using ID.me technology, which the IRS now uses to authenticate their identities, requiring them to either submit a selfie for facial recognition along with government identification, such as a driver’s license or passport, or complete a live virtual interview with customer service agents (See the story).
Many taxpayers choose to use a tax professional to help them deal with IRS notices, but that may mean assigning an attorney to access the notices.
“If you’re going to hire a professional to do it for you, they’re going to need you to give them that power of attorney so they can access the same information,” O’Saben said. “If someone brings a letter to my office, for example, my first question would be, ‘What’s the root cause of this?’ There might be something we can appeal or file an amended statement on. We need to get more information.”
Companies that advertise quick solutions to IRS debt problems may be creating headaches for taxpayers of their own. The IRS itself often offers options such as extensions, payment plans, installment agreements, and offers in compromise that a taxpayer or tax professional can arrange. “The IRS has all kinds of tools,” O’Saben said.
Separately, NATP also supports a recent bipartisan Senate bill introduced last week by Sen. Sherrod Brown, D-Ohio, and Bill Cassidy, R-Louisiana, called the Red Tape Reduction Act, which would increase the threshold when physical and small. – Business owners receive Form 1099-K from third-party billing companies (See the story).
The Red Tape Reduction Act would increase the threshold from $600 to $10,000, ensuring that fewer small businesses and individuals are affected by potentially excessive documentation and online activity requirements. The American Rescue Plan Act reduced the reporting requirement to $600 from $20,000, effective for the 2024 tax season when filing a 2023 return.
“While the intentions of the Bailout Act were well-intentioned and aimed at injecting unaccounted income into the economy, a $600 reporting threshold would have placed undue burdens on many small businesses and individuals, not to mention the paperwork nightmare that the bottom line would create.” Created for the IRS,” O’Saben said in a statement. “Raising the filing threshold to $10,000 would better address ARPA’s intent while reducing the administrative burden that would have created the $600 threshold.”