Today the IRS announced that it was temporarily suspending collection notices. The announcement indicates that some notices are already in the stream and taxpayers may receive them over the next few weeks. The notice clearly responds to the concern raised by Congressman Neal. It does not say that the IRS will withhold collection from individuals who have passed through the collection notice stream and upon whom the IRS can now levy. Such individuals may have paid their liability during the period of IRS closure, may have filed a return with an overpayment that would pay the liability, may have sought relief through an offer in compromise or innocent spouse request or other statutory relief mechanism as yet unknown to the IRS until it processes its mail. So, it remains unclear what will happen to these individuals and entities.
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This is a step in the right direction. However, the IRS is also mailing out Notice CP59, Request for Tax Return, for taxpayer’s who have a return (e.g. 2017, 2018) not filed. The problem of course, is that many of these taxpayers have sent in the outstanding return since February and the IRS doesn’t know it has it. This notice also causes the taxpayer much concern. In particular, the Notice requests that if the return has been previously filed to send them another copy. This is actually the last thing the IRS needs or wants which is two copies of the same return floating around. The IRS should also stop sending Notice CP59 until it processes its backlog of mail.
Notices generate phone calls. IRS does not have enough staff to answer the phone. This reminds me of Lucy and Ethel at the chocolate factory.
Many paper returns filed in April have still not been processed. I just saw one that IRS received back then with a refund of about $2,600. When finally paid, it also included more than $30 interest. There is bipartisan support in Congress for another round of $1,200 “economic impact” payments, so of course that has not been enacted. Isn’t the next best thing, getting those refunds issued after four months? (While saving Mr. Mnuchin’s Treasury some interest expense.)
There are also reports of uncashed checks sent to IRS, for payments on Forms 1041 and 720 filed by July 15. If IRS managers are concerned with collections, they might be surprised by how much they find just by opening the mail. Meanwhile, don’t send notices to delinquent taxpayers when there are 30 million Americans collecting unemployment.
I love the “Lucy and Ethel” metaphor!
For those who came of age a generation or two after we did:
So pursuant to tax statutes, no balance due notices, no NOD, no NOD, no collection. No collection, no liens and levies. No liens and levies…no repossessions, confiscations, exactions or theft. I have always wondered why the Notices were not called Tax Bills.
The longer we can keep money in peoples hands the better.