United States

IRS updates taxpayers on its operating status

A few noteworthy updates about IRS operations

TAX ALERT  | 

The IRS recently announced the current operating status of its various operating units. In addition, the announcement informed taxpayers they need not respond to late payment penalty notices if they timely mailed tax payment checks due by July 15, 2020. The IRS confirmed that although it receives mail, its mail-processing function remains scaled back causing a backlog of unopened mail. The IRS reassured taxpayers that once it processes the payment, the payment will be posted as of the date the IRS received the payment and not the date the IRS processed the payment. The IRS suggests waiting to contact the agency about any unprocessed paper payments and suggests that any late payment penalties that were assessed by the IRS during this time will self-correct and be abated later.  

Please note that based on the IRS’s guidance the taxpayers can still end up with the late payment penalties because the IRS is confirming in its announcement that it will process the payments with the date the IRS received the payment and not the date the payment was mailed. This statement by the IRS is incorrect. Section 7502, which states the “timely mailed, timely filed” rule, also considers “timely mailed as timely paid.”  

Taxpayer should carefully review any notices they receive from the IRS. If the taxpayer confirmed that the payment has not yet been processed, the IRS recommends not responding to payment due notices. However, if a penalty notice asserts a delinquency penalty because the tax payment was received or processed late, but was timely mailed, such penalty notice may require the taxpayer to respond with a proof of timely mailing of the check and an explanation of the provisions in section 7502. 

In the announcement, the IRS acknowledges longer than usual time for processing all of the taxpayer paper or e-filed correspondence, including the tax returns. The IRS encourages taxpayers to use online services at www.irs.gov whenever possible, including making electronic payments of tax via Electronic Federal Tax Payment System. Other items to note include an update that the CAF backlog for processing third –party authorizations is 15 business days and that taxpayer assistance centers have reopened, but require an appointment for in-person assistance.

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