Good News! IRS Announces Suspension of Certain Taxpayer Notices

IRS attempts to reduce paperwork backlog

It is no secret that the IRS has struggled to keep up rapidly changing tax laws and resulting increased demand – in both the pandemic and post-pandemic eras.

As of late December 2021, the IRS guessed it was working through a pile of unprocessed documents that included 6 million original returns, 2.3 million amended returns, and 5 million pieces of taxpayer correspondence.

To reduce paperwork caused by the large backlog of unprocessed returns from last year, the IRS announced they were going to stop mailing out some notices.

On February 9, 2022 the IRS identified the letters and notices they will suspend (see below):

Individual Taxpayer Notices

• CP80: Notice that indicates the IRS has received payments from a taxpayer without receiving a corresponding tax return. If you know you have filed your tax return timely this notice should be ignored if received.
• CP59: Unfiled tax return, first notice. The IRS sends this notice when it has no record of a prior-year return being filed. The Spanish-language version, CP759, is included.
• CP516: Unfiled tax return, second notice. This is a request for information on a delinquent return for which there is no record of filing. The Spanish-language version, CP616, is included.
• CP518: Final notice — return delinquency. The Spanish-language version, CP618, is included.
• CP501: Balance due, first notice. This letter is a reminder of an outstanding balance on the taxpayer's accounts.
• CP503: Balance due, second notice.
• CP504: Balance due, third and final notice. This also is a notice of intent to levy.
• 2802C: Withholding compliance letter. This letter notifies taxpayers whom the IRS has identified as having under withheld taxes from their wages, with instructions on correcting their withholding amount.

Business Notices

• CP259: Business return delinquency. The IRS has no record of a prior-year return having been filed. The Spanish-language version, CP959, is included.
• CP518: Final notice of a business return delinquency. The Spanish-language version, CP618, is included.

Additional IRS clarification and considerations

The IRS said that some taxpayers and tax professionals may still receive these notices during the next few weeks. However, there is no need to call or respond to the notice, as the IRS continues to process prior year tax returns. The only reason for a taxpayer to respond is if they are behind on their taxes. The IRS did caution that people who have a balance due will continue to have interest and penalties accrue.

It is currently unknown how long the letters and notices will be suspended. The news release from February 9 states that, “the IRS will continue to assess the inventory of prior year returns to determine the appropriate time to start sending them again.”

IRS Commissioner Charles Rettig is doing everything in his power to get through the buildup. While Rettig recently reassigned 1,200 staffers to help with the backlog, the IRS believes it may need Congressional law changes to get caught up. They are attempting to fill 5,000 necessary positions to help with the backlog but most of the jobs have pay grades under $25k a year. With the annual salary so low, they have only been successful in filling 179 of the open spots. And as a result, the end of the backlog is still not in sight.

The best chance taxpayers for a quick, mostly painless tax season is to electronically file returns as well as auto pay balances due - or choose to have their refund deposited directly into their bank account.

Please contact Herbein if you have questions regarding this article or any tax notice that you may receive from the IRS.

Article prepared by Susie Pancoast