October 15, 2020 - Douglas Myser

IRS catching up after covid shutdown. During a political showdown between Republicans and Democrats, the government was shut down nearly and year and a half ago. The result for the IRS was getting back up to speed, as they had nearly 1.5 million pieces of mail that piled up and numerous other tasks that waited in the wings. The Covid shutdown has been much bigger in contrast. Over 15 million pieces of mail wait to be sorted through, and the number of tasks are even greater. In response, several tasks that the IRS normally takes on, have been temporarily delayed, to free up resources, to get back to speed as quickly as possible. IRS catching up after covid shutdown.

The IRS announced it has suspended sending certain balance due notices to taxpayers while it continues to process its backlog of unopened mail, which ma in some cases contain the sought payments. The IRS said it was working to identify and correct erroneous penalties it applies to some employers who reduced their payroll tax deposits to claim Covid-19 relief related credits. In the first announcement, three types of taxpayer follow up notices are suspended--CP501, CP503--, and CP504--all of which the IRS typically sends after first notifying a taxpayer via a CP 14 letter of a tax account balance due and not receiving a response.

The action comes two days after U.S. Rep. Richard Neal, D-Mass., chairman of the House Ways and Means Committee wrote IRS Commissioner Charles Rettig to request that the IRS temporarily stop sending notices to taxpayers regarding payments that taxpayers had mailed to the IRS on time but "whose correspondence and payments remain unopened" in the Services unopened mail, which at one point in recent months was estimated at 15 million items. In its announcement, the IRS acknowledged it still has a mail backlog, which accumulated during the COVID-19 related closure of most of its operations but said it was making "significant progress" in it.

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