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IRS billing taxpayers erroneously after not opening mail


jklcpa

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https://www.forbes.com/sites/irswatch/2020/08/13/the-check-really-is-in-the-mail-after-failing-to-open-envelopes-irs-duns-taxpayers-for-money-theyve-sent/amp/

Payments that are mailed to lockboxes are streamlined for processing, but payments that were mailed to service centers went unopened because of the shutdown. Article specifically mentioned the Ogden, UT service center as a problem but must have happened in the others too. 

Here's the update that appears at the end of the article:

 

Quote

August 14th update: Last night, after this article posted, the IRS updated its web site with the following alert that reads in part:

Pending Check Payments and Payment Notices: If a taxpayer mailed a check (either with or without a tax return), it may still be unopened in the backlog of mail the IRS is processing due to COVID-19. Any payments will be posted as the date we received them rather than the date the agency processed them. To avoid penalties and interest, taxpayers should not cancel their checks and should ensure funds continue to be available so the IRS can process them. To provide fair and equitable treatment, the IRS is providing relief from bad check penalties for dishonored checks the agency received between March 1 and July 15 due to delays in this IRS processing. However, interest and penalties may still apply. Due to high call volumes, the IRS suggests waiting to contact the agency about any unprocessed paper payments still pending.

So clearly, the IRS is aware of the problem and the concern it causes taxpayers, yet has not indicated they will “stop the machine” that automatically generates the collection notices. Taxpayers need more than an apology for the inconvenience this situation has created.

 

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Copied from IRS eNews:

"3.  Pending check payments and payment notices

If your client mailed a check with or without a tax return, it may still be unopened in the backlog of mail the IRS is processing due to COVID-19. Any payments will be posted as the date IRS received them rather than the date the agency processed them. To avoid penalties and interest, taxpayers should not cancel their checks and should ensure funds continue to be available so the IRS can process them. To provide fair and equitable treatment, the IRS is providing relief from bad check penalties for dishonored checks the agency received between March 1 and July 15 due to delays in IRS processing. However, interest and penalties may still apply.

Due to high call volumes, the IRS suggests waiting to contact the agency about any unprocessed paper payments still pending. See www.irs.gov/payments for options to make payments other than by mail."

I find this a bit confusing, so if my client mails a payment which is due on July 15th on the 15th of July and the IRS records the date of payment on the date they received my client's letter

say July 19th, is my clients payment considered to be late subject to a late payment penalty?🙄

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5 minutes ago, cbslee said:

I find this a bit confusing, so if my client mails a payment which is due on July 15th on the 15th of July and the IRS records the date of payment on the date they received my client's letter

say July 19th, is my clients payment considered to be late subject to a late payment penalty?🙄

Hope the IRS corrects its statement because we all should know that code sec 7502 that says that the postmark date is the date payment is considered to have been made, not the date IRS receives it.   

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42 minutes ago, jklcpa said:

Hope the IRS corrects its statement because we all should know that code sec 7502 that says that the postmark date is the date payment is considered to have been made, not the date IRS receives it.   

That may be, but I remember about 10 or 12 years ago  a discussion where the IRS said that they paid attention to how many days on average it took 1st class mail

to travel from the sender's mailing location to their P O Box and that unless it was Certified Mail the postmark was not considered to be the determining factor.

As I recall this came up because so many people had access to programs like Stamps.com or there own small postage meter which could allow you to imprint postage on a letter and then mail the letter some days later.

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Welp, I just got an email from clients very likely affected by this very situation.  They are not happy campers.  Thanks, Judy, for the link to the article which I promptly shared with them.  There is, however, the chance that one of the spouses (filing MFS) didn't mail in the voucher as directed.  They are both 80+ but pretty sharp but one never knows.

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It turns out that the second voucher was missed.  It was uploaded with everything else into the portal but just missed.  I believe they will go electronic from now on and are going to pay online this balance due.  I always discourage mailing payments (though I DO support the postal service) and encourage direct deposit. 

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On 8/17/2020 at 4:14 PM, Abby Normal said:

I always take it as an opportunity to remind clients of the many benefits of electronic payments.

We have some trusts where the fiduciary is an institution, and the people actually handling the trust are NOT the official fiduciary, and don't have the ability/authority to set up electronic payments.  Heck, this year we even had one trust where everyone at the institutional fiduciary was working from home and they could generate payments to go out, but could not match those with payment coupons!  They called us to beg if they could mail payments to us, early, and have us send in to agencies with the vouchers.

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