The IRS is suspending its overdue notice to taxpayers. Why experts say it’s “a prudent decision”.


It’s tax time and the IRS is trying to dampen some of the pandemic-induced panic that many people are likely to feel again this year.

Still grappling with a backlog of about 6 million unprocessed individual returns dating back to 2019, the agency announced last week that it would suspend sending automated warnings to filers that their taxes are overdue.

“In many situations, the tax return may be part of our current paper tax inventory and has simply not been processed,” the IRS said in a statement. “Stopping these letters – which could have been sent to thousands of taxpayers – will help avoid confusion.”

It will also prevent angst, added Charlotte Crane, a law professor at Northwestern University.

“Normally the IRS has computers set up to send notices to taxpayers notifying them when a tax return is overdue,” she said in an email. “But right now there is a big backlog of taxpayer returns that have been filed but have not yet been processed.”

Many of these taxpayers, Crane said, “are actually in good standing with the IRS because they received credit for paying taxes owed on these returns — whether through withholding, estimated payments, or when filing of the return since these filings are made before the returns are processed – even if their returns have not been fully processed.

So instead of sending “an alarming automated notice to a taxpayer who has filed a return that has not yet been processed,” she said, the agency chooses not to send an alert “even if the IRS computers think the return is still missing.”

“It’s a prudent move on the part of the IRS,” said Brian Marks, who directs the entrepreneurship and innovation program at the University of New Haven.

“With this huge backlog of unprocessed tax forms as a result of the pandemic, it’s a sensible approach,” he said. “This helps minimize confusion and will help the IRS continue with its primary job of processing tax forms.”

Hampered by the largely Republican refusal under Trump to increase its budgets so it can hire more workers and modernize its computer system, coupled with pandemic-related constraints, the IRS has struggled for several years to process tax returns on time. timely.

Most years, the IRS begins filing season with approximately one million returns to process. This year, it’s six times that amount, according to the agency.

“Our employees have worked hard and long hours during the pandemic to help taxpayers and successfully modify our systems, despite the lack of funding we need to properly serve the American people,” said the IRS Commissioner, Chuck Retig.

This year, the agency stopped sending what are called CP80 notices to taxpayers “who have made a payment and appear not to have filed,” spokesman Eric L. Smith said.

“Due to delays in processing 2019 and 2020 tax returns, the issuance of CP80 and CP080 notices (unfiled tax return – credit to account) has been suspended,” the IRS said. “If you receive a notice for your 2019 return and you filed more than six months ago, please file the return again. If you receive a notice for your 2020 return, DO NOT file again.

Many in-person IRS centers where paper forms are processed have been forced to close due to Covid. And the coronavirus, coupled with budget cuts, has led to a 25% drop in staff size.

Meanwhile, the IRS’ workload increased dramatically as the federal government introduced programs designed to help the country through the pandemic, such as expanded child tax credits and stimulus payments. .

“By definition, no matter how more efficient you are, you can’t lose 25% of the workforce and assume you can do the same amount of work,” said John Koskinen, who served as commissioner. of the IRS under Presidents Barack Obama and Donald. Trump, told the Washington Post. “It’s a problem at every level – information technology, tax officials, people answering the phone.”

The deadline for reporting income earned in 2021 is April 18. There are no plans to extend that deadline this year, the agency said.

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