The IRS’s backlog in processing some mailed in payments is something most tax professionals have dealt with in recent weeks. Now the Chairman of the House Ways and Means Committee, Representative Richard Neal (D-MA), has called on the IRS to halt sending out notices demanding payment until the backlog is cleared by the agency.[1]

The letter notes:

IRS officials reported that, due to office closures, the IRS has accumulated a staggering backlog of unopened mail. At one point this summer, the IRS had approximately 12 million pieces of unopened correspondence in its inventory. Despite this unprocessed mail, the IRS reportedly has been sending notices to taxpayers whose correspondence and payments remain unopened. Therefore, many of the taxpayers receiving these notices already have made the payments that the IRS seeks.

The letter goes on to note that taxpayers are put under stress when receiving such letters and have no real way to respond and stop future notices:

These notices impose unnecessary stress on taxpayers who, upon receipt, must contact the IRS for assistance. This is particularly troubling at a time when the IRS is telling taxpayers who need to call the agency “to expect long waits due to limited staffing.” Taxpayers reaching out for assistance on the telephone must hope someone can answer their call and that all payments they have made have been opened, processed, and indicated on their account. Certainly, any additional correspondence generated by these notices can prove difficult for the IRS to handle and cause significant delays for taxpayers seeking fair resolution. For many Americans, this is an additional burden that they simply do not have the capacity to address during this crisis.

The Chairman requests that the IRS pause sending notices regarding such payments at this time and consider establishing a portal where taxpayers could respond to indicate they have mailed in payments since March:

In light of these concerns, I respectfully request that the IRS temporarily pause sending notices to taxpayers who might be impacted by the correspondence backlog. During this time, I ask the IRS to consider establishing a portal through which taxpayers can alert the IRS that they have mailed payments since the beginning of March. Such portal could assist the IRS in preventing additional incorrect notices from being sent to taxpayers who have already mailed payments.

The letter asks the IRS to not resume sending such notices until the backlog is resolved:

The IRS should not resume sending notices to taxpayers until the backlog has been reduced to pre-pandemic levels and taxpayer accounts have been updated. At such time, the IRS should carefully review any notices before sending to ensure that they are correct and timely and that taxpayers are in no way being penalized for the delay.

The Chair takes issue with a limitation of relief noted in last week’s IRS announcement of a waiver for dishonored check penalties for taxpayers that have checks dishonored by the IRS when presented for payment months later:

Last week, the IRS acknowledged that it was providing administrative relief from “bad check penalties . . . in certain circumstances due to delays in IRS processing.” However, the IRS warned that “interest and other civil penalties may still apply,” which I believe is insufficient.

The letter notes that this is the second time the IRS has sent out incorrect notices in recent months, apparently referring to the IRS mailing out notices that had been generated but not mailed during the agency’s shutdown following the declaration of a national emergency related to COVID-19. Many of those notices showed a due date for response or payment that was earlier than the date the notice was mailed.

[1] Ways and Means Committee Chair Rep. Richard Neal (D-MA), Letter to IRS Commissioner Charles Rettig Dated August 19, 2020, https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/2020.08.19%20Letter%20to%20IRS%20re%20Notices.pdf (retrieved August 20, 2020)