Got an IRS CP-80 Unfiled Tax Return Notice? A CP501 Balance Due Notice? You can probably disregard … [+]
Internal Revenue Service computers keep spitting out perplexing letters and notices to taxpayers, and today the agency announced that it’s going to stop the machines, at least temporarily, in an effort to help taxpayers and tax pros. The 2022 tax season kicked off on January 24 for filing 2021 tax year returns, but millions of taxpayers are still waiting for the IRS to process last year’s returns.
Example: You filed your 2020 tax return last April. The IRS cashed your check. Why are you getting an alarming CP-80 Unfiled Tax Return notice that says: “We haven’t received your tax return. What must you do immediately? If you’re required to file, please file today. If you’ve already filed, please send a newly-signed copy.”
Savvy tax pros know that the IRS is woefully backlogged, and the best response is to wait it out. A California tax preparer who filed on paper with a check attached last April emailed me that he got a CP-80 notice last month. The IRS cashed the check, but hasn’t gotten to his return—10 months later. His plan: “IRS thinks I have overpaid; I can wait 6 months to see if they catch up on paper.” In the meantime, the IRS has updated its web site, Understanding Your CP80 Notice, to tell folks who are getting CP-80 Notices who have already filed their 2020 returns: “DO NOT refile.”
That’s all the IRS needs—more paper! As of the February 7 update to the IRS Operations page, the IRS has made some progress on whittling down the number of amended tax returns for tax year 2020 in processing (2.3 million as of January 8), but it hadn’t updated the number of outstanding individual returns for 2020 (6 million as of December 31). “The IRS is opening mail within normal timeframes and all paper and electronic individual refund returns received prior (emphasis added) to April 2021 have been processed if the return had no errors or did not require further review.”
That backlog is causing problems down the line. Hence, the decision — after outcry from tax professionals and members of Congress — to stop sending some taxpayer notices and letters for now.
The IRS announcement notes that these automatic notices have been temporarily stopped until the backlog is worked through, and that the agency will continue to assess the inventory of prior year returns to determine the appropriate time to resume the notices. Some taxpayers might still get these notices and letters in the next few weeks. “Generally, there is no need to call or respond.” But watch out: If you believe a notice is accurate and you have a balance due, the IRS says that interest and penalties can continue to accrue.
Here’s the rundown of suspended notices and letters:
CP-80 Unfiled Tax Return(s) 1st Notice: This notice is generally sent when the IRS credited payments and/or other credits to a taxpayer’s account for the tax period shown on the notice, but the IRS hasn’t received a tax return for that tax period.
CP-59 and CP 758 (Spanish version): The IRS sends this notice when there is no record of a prior year return being filed.
CP-516 and CP-616 (Spanish) Unfiled Tax Return(s) – 2nd Notice: This notice is a request for information on a delinquent return as there is no record of a return filed.
CP518 and CP618 (Spanish) Final Notice -Return Delinquency: This is a final reminder notice that the IRS still has no record of a prior year tax return(s)
CP-501 Balance Due — 1st Notice: This notice is a reminder that there is an outstanding balance on a taxpayer’s accounts.
CP-503 Balance Due — 2nd Notice: This notice is the second reminder that a there is an outstanding balance on a taxpayer’s accounts.
CP-504 Final Balance Due Notice/3rd Notice/Intent to Levy: The IRS sends this notice when a payment has not been received for an unpaid balance. This notice is a Notice of Intent to Levy (Internal Revenue Code Section 6331 (d)).
2802C Withholding Compliance Letter: This letter is mailed to taxpayers who have been identified as having under-withholding of Federal tax from their wages. This letter provides instructions to the taxpayer on how to properly correct their tax withholding.
Two business notices are also being temporarily paused.
CP259 and CP959 (Spanish) Return Delinquency: IRS sends this notice when there is no record of a prior year return being filed.
CP518 and CP618 (Spanish) Final Notice -Return Delinquency: This is a final reminder notice that the IRS still has no record of a prior year tax return(s)
A coalition of taxpayer professionals, the Tax Professionals United for Taxpayer Relief Coalition, including the AICPA and H&R Block, is calling for more. They’ve asked the IRS to pause all automated compliance actions and provide relief from underpayment and late payment penalties. Stay tuned.
Further Reading:
IRS To Drop Facial Scan ID.me Verification For Online Accounts
Taxpayer Relief Still Caught In Tug Of War Between Congress And The IRS
