Do NOT Worry: The IRS Probably Has Your Check

September 01, 2020

By Brent Lipschultz

On August 21, the IRS suspended the mailing of three types of notices that go to taxpayers who have a balance due on their taxes: the CP501, CP503, and CP504.

We have learned that the IRS has approximately 12 million pieces of unopened correspondence in its inventory.  Yet, despite that unopened mail, the IRS had been sending the above-mentioned notices to taxpayers whose correspondence and payments remained pending but were possibly somewhere in those 12 million pieces of unopened mail.  Many of those receiving notices had already made payments

The IRS has taken steps to control the confusion for those who have received the balance due notices (CP14) and who mailed a payment to the IRS.  (For those who do not respond to the CP14 letter, the CP501, 503 and 504 are automatically sent.)  It is recommended that those taxpayers who have received but have not yet responded to the CP14 balance due notice to promptly respond.

The IRS has previously announced that payments in the unopened mail will be posted and credited on the date the IRS received them – rather than the date the agency opened and processed them. Taxpayers in this situation should not cancel their checks and should ensure funds continue to be available so the IRS can process them to avoid potential penalties and interest.  The IRS is also 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.

As the IRS works to stop these mailings at their processing centers, taxpayers and advisors may still receive these notices during the next few weeks due to delivery delays of existing mail.

We recommend that taxpayers consider other alternatives to make payments if they are not comfortable having direct withdrawal rights following an e-filed tax return. Other options include Direct Pay, which can be used for payment of tax on any series of the Form 1040 or estimated taxes. Taxpayers can choose to pay by debit card.  Or they can pay by credit card, though this can get expensive with interest rates charged as high as 2% currently.

About Brent Lipschultz

Brent Lipschultz is a Partner in the Personal Wealth Advisors Group with over 25 years of experience, and a leader in the International Wealth Planning team.