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08/21/2023

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You never may have heard of a Payroll Professional, but we're here to let you know who they are. Here's what they do!   ...
08/19/2023

You never may have heard of a Payroll Professional, but we're here to let you know who they are. Here's what they do!

There are many ways to do payroll. Which one do you think works best for you?
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There are many ways to do payroll. Which one do you think works best for you?

Bookkeepers do important work, and help businesses stay afloat.
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Bookkeepers do important work, and help businesses stay afloat.

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At W.E.B.S., We've got you!👍
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At W.E.B.S., We've got you!👍

Small Business Owners, It may be helpful to save money on postage by using E-Paychecks!
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Small Business Owners, It may be helpful to save money on postage by using E-Paychecks!

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07/22/2023

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07/21/2023

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In the news... In the news... TAS Success Story: TAS Advocates for Bank Levy Release: July 20, 2023  – A taxpayer contac...
07/20/2023

In the news... In the news... TAS Success Story: TAS Advocates for Bank Levy Release: July 20, 2023 – A taxpayer contacted the IRS to resolve a balance due that exceeded $150,000, which required the taxpayer establish a short-term payment plan.



External Article



Success Story: TAS Advocates for Bank Levy Release



A taxpayer contacted the IRS to resolve a balance due that exceeded $150,000, which required the taxpayer establish a short-term payment plan. However, the IRS assistor didn’t finalize the agreement on the taxpayer’s account, resulting in the taxpayer’s bank account being levied with over $20,000 being attached. The taxpayer was incapacitated and unable to work, making the impact of the levy action immediate and severe. TAS contacted the IRS on behalf of the taxpayer, explained that a short-term payment plan had been granted and that the levy occurred while that payment plan was in place. TAS promptly secured the bank account information when requested by the IRS and was able to successfully advocate for the levied funds to be released and returned to the taxpayer’s bank account. TAS’s actions relieved the financial hardship and fully resolved the taxpayer’s issue.

When working with the Taxpayer Advocate Service, each individual or business taxpayer is assigned to an advocate who listens to the problem and helps the taxpayer understand what needs to be done to resolve their tax issue. TAS advocates will do everything they can to help taxpayers and work with them every step of the way. Occasionally we feature stories of taxpayers and advocates who work together to resolve complex tax issues. Read more TAS success stories.

Learn more about whether TAS can help you: Can TAS help me with my tax issue?

The post TAS Success Story: TAS Advocates for Bank Levy Release appeared first on Taxpayer Advocate Service. Thoughts?

TAS promptly and successfully advocates for levied funds to be released and returned to a taxpayer’s bank account.

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07/18/2023

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07/17/2023

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07/15/2023

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In the news... In the news... TAS Tax Tip: What if I receive an IRS notice that says something is wrong with my 2022 tax...
07/14/2023

In the news... In the news... TAS Tax Tip: What if I receive an IRS notice that says something is wrong with my 2022 tax return?: July 14, 2023 – t is the IRS’s responsibility to make sure your tax return is as accurate as it can be while it is processed and verified.
TAS Tax Tip: What if I receive an IRS notice that says something is wrong with my 2022 tax return?

Don’t panic! It is important to remember – not all correspondence from the IRS necessarily contains bad news.

It is the IRS’s responsibility to make sure your tax return is as accurate as it can be while it is processed and verified. These verification checks can include anything from finding and fixing basic mathematical errors to checking for required attachments, like schedules that support a credit or deduction you are claiming. The IRS also checks to confirm the amounts shown on your return match what banks, employers, third parties, and other government agencies have reported. In some cases, these checks may identify a credit that if you if you are eligible, could result in a bigger refund.

What should I do if I get correspondence regarding my tax return?

Open it, read it, and keep it in a safe place (in case you need it later). IRS correspondence always tells you why the IRS is writing, what topic it is about, and either what you need to do in response and by when, or it will tell you that you don’t need to reply at all.

Letters and notices aren’t always easy to understand. So, here are three resources we recommend you use if you want more help understanding that particular notice or letter:

* Taxpayer Advocate Service’s Taxpayer Roadmap: Use the ‘Did you get a notice from the IRS?’ look-up feature to find a simplified explanation of why it is being sent. Then click on the ‘See notice details’ area to find a fuller explanation of why it is being sent, what this means for you and what next steps you should take. It also provides additional links to related resources you may need to see or use to provide missing information.

* Taxpayer Advocate Service’s Get Help pages: These webpages provide detailed instructions to help you resolve the most common issues we see by yourself. They are grouped by categories. For return processing issues, start with I Got a Notice From the IRS. Then if needed review specific topics that apply to your situation like, I Made a Mistake on My Return or I Need Help Resolving My Balance Due.

* IRS’s Understanding Your IRS Notice or Letter page: These pages explain why notices are sent and contain a search feature to find your specific notice and related information.

Note: To find the correspondence number look in either the top or bottom right-hand corner. They will generally be preceded by the letters CP or LTR.

Do I need to reply?

Whether you need to reply or not will depend on the issue.

If you agree with the information or change listed, sometimes there is no need to reply. Other times, even if you do agree, you may need to provide specific information to resolve the issue, particularly if you need to verify your identity or if a schedule is missing. In most tax return processing situations, you generally have 60 days to reply, but be sure to go by the date specified in your letter.

If you disagree, the letter should outline how to dispute the issue, including what action(s) is needed and a date to complete the action by, as well information about your Taxpayer Rights.

Whether you agree or not, if it requires a reply – do not delay! You must reply by the date required or you may lose certain resolution options or may also have to pay in full before the IRS will consider your position. See more on this below.



When to respond

If your notice or letter requires a response by a specific date, there are many reasons you’ll want to comply. Here are just a few:

* minimize additional interest and penalty charges;

* prevent further action from being taken on the account or against you; and

* preserve your appeal rights if you don’t agree.

If you need more time to respond than indicated, contact the IRS using the contact information provided.

How and where to reply

The correspondence should tell you exactly where to send your response, whether it’s to a mailing address or fax number. Follow the instructions.

What if I want to talk to someone?

Each notice or letter should include contact information. The telephone number is usually found in the upper right-hand corner.

If a specific employee is working your case, it will show a specific phone number for that employee or the department manager. Otherwise, it will show the IRS toll-free number (800-829-1040).

The IRS encourages taxpayers to make use of the IRS.gov website and its online resources, like Tax Law Questions to get questions answered and find resources to resolve problems.

Important: You’ll want to check the IRS’s Help for taxpayers and tax professionals: Special filing season alerts page for announcements related to processing 2022 tax returns before you call in case the information you need is located there.

The best days to call the IRS are Wednesdays, Thursdays, and Fridays. The IRS advises that wait times are the longest on Mondays and Tuesdays, and close to the April filing deadline.

Have a copy of your tax return and the correspondence available when you call.

Wait – I still need help

You can generally resolve most notices or letters without help, but you can also get the help of a professional – either the person who prepared your return, or another tax professional.

If you can’t afford to hire a tax professional to assist you, you may be eligible for free or low cost representation from an attorney, certified public accountant, or enrolled agent associated with a Low Income Taxpayer Clinic (LITC). In addition, LITCs can help if you speak English as a second language and need help understanding the notice or letter. For more information or to find an LITC near you, see the LITC page or IRS Publication 4134, Low Income Taxpayer Clinic List.

If your IRS problem is causing you financial hardship, see Can TAS help me with my tax issue?.

More resources

* Issues & Errors Get Help topics

* Paying Taxes Get Help topics

* Notices from the IRS

* Understanding your CP12 Notice from the IRS

* NTA Blog: Math Error Part I

* NTA Blog: Math Error Part II: Math Error Notices Aren’t Just Confusing; Millions of Notices Adjusting the Recovery Rebate Credit Also Omitted Critical Information

* Let Us Help You



The post TAS Tax Tip: What if I receive an IRS notice that says something is wrong with my 2022 tax return? appeared first on Taxpayer Advocate Service. Thoughts?

Notice from IRS - Here's what to do if you receive an IRS notice that says something is wrong with your 2022 tax return.

It's the end of the week, everyone! What's a recent hardship you couldn't believed you overcame?
07/14/2023

It's the end of the week, everyone! What's a recent hardship you couldn't believed you overcame?

Good morning! What has you motivated this Thursday?
07/13/2023

Good morning! What has you motivated this Thursday?

In the news... In the news... NTA Blog: Disaster Relief: What the IRS giveth, the IRS taketh away. Or so it seems for di...
07/12/2023

In the news... In the news... NTA Blog: Disaster Relief: What the IRS giveth, the IRS taketh away. Or so it seems for disaster relief taxpayers until you get to page 4 of the collection notice. (Part Two): July 12, 2023 – As discussed in Part One, over one million taxpayers living in a disaster area filed their returns early with a balance due, expecting to make a timely payment by the postponed dates. Unfortunately, for taxpayers covered by a disaster declaration the IRS followed its normal collection procedures and mailed an initial collection notice and demand, Notice CP14, reflecting an incorrect due date. The notice also informed the taxpayers that interest and penalties would accrue after the due date reflected on the front page of the notice. This is wrong for taxpayers covered by disaster declarations because payment is not required prior to August 15 or October 16, depending on the disaster area when the original due dates fall within the postponement period. To remedy the incorrect date, the IRS included a short paragraph on the back of page four of the Notice CP14. However, the additional language did not solve the problem. Instead, it led to confusion and questions.

What Is the IRS Doing? What Can Affected Taxpayers Expect?

After receiving complaints from affected taxpayers, the IRS decided to send out updated notices (Notice CP14CL) to clarify that taxpayers covered by disaster declarations do not have to pay before the postponed due date, August 15, 2023, or October 16, 2023. The updated notice will reiterate that early payment or taxpayer response is not needed. Impacted taxpayers should expect to start seeing those letters in the mail shortly.

Bottom Line: Taxpayers covered by a disaster declaration who receive a Notice CP14 should read the entire document including any inserts. The subsequent mailings, CP14CL state, “Since your address of record is located in a federally declared disaster area, the IRS has automatically granted you disaster relief. This gives you an extension of time to file your tax returns as well as make your tax payment listed on the CP14 Notices. You do not need to contact us to get this extra time to pay.”

Other taxpayers located in a disaster area and planning on filing their return without payment prior to the postponed date (October 16 or August 15) should expect to receive an erroneous Notice CP14, Notice and Demand, reflecting an incorrect due date prior to the postponed date. The challenge for many taxpayers is understanding the rules, feeling comfortable that they are living in a qualified “disaster relief area”, and certainty that they qualify for the additional time to timely pay without incurring interest or penalties. Taxpayers can verify what locations and counties are covered by the relief on irs.gov.

Need for Legislative Change

IRC § 6303(b) is not applicable because of the legal distinction between “the last date prescribed for payment of such tax” in IRC § 6303(b) (which is generally April 15 for individuals determined without regard to any extension of time for filing the return pursuant to IRC §§ 6151 and 6072) and the postponement of the deadline of a tax-related act under IRC § 7508A, when the Secretary determines that a taxpayer has been affected by a federally declared disaster.

When a filing or payment deadline is postponed under IRC § 7508A as a result of a federally declared disaster, the Secretary is authorized to “disregard” for up to one year certain acts a taxpayer is required to undertake under the Internal Revenue Code, including the filing of a tax return or payment of tax, but the wording of IRC § 7508A doesn’t change the time prescribed for payment of tax or extend the due dates for a tax-related act. That is likely a drafting glitch – or it was written when the frequency and consequences of “postponements” or disaster relief were less impactful than they are today.

When a federal disaster is declared, the postponement of a payment deadline does not change the prescribed due date for payment, it merely allows the IRS to disregard a time period of up to one year for performance of the tax-related act. This nuance is lost on non-tax professionals. If a taxpayer is given additional time to file a return or pay tax, the “the last date prescribed for payment” should be the postponed due date – not the original due date. The current rule creates confusion and potentially harms taxpayers. For example, in the National Taxpayer Advocate’s 2023 Purple Book, I highlighted that taxpayers generally have three years from the time they file their tax returns to submit refund claims, but more than 50 million taxpayers who took advantage of the “postponed” filing deadlines in 2020 and 2021 due to the COVID-19 pandemic have less than three years to file refunds claims (because when a filing deadline is postponed under IRC § 7508A, the three-year lookback period in IRC § 6511(b)(2)(A) on amounts paid is not extended to include payments made more than three years earlier than the postponed filing date). The three-year lookback period is only expanded if a taxpayer obtains an “extension” of the filing deadline – not if the IRS “postpones” the filing deadline), which may cause the taxpayer to lose out on refunds for which they would otherwise be eligible. After much prodding, on February 27, 2023, the IRS issued Notice 2023-21 fixing the mismatch between the time for filing a claim for credit or refund and the three-year lookback period caused by postponing certain filing deadlines for 2019 and 2020 returns, which would have resulted in the denial of timely claims for credit or refund for those taxpayers who took advantage of the postponed deadlines. See my February 27 blog (NTA Blog: Lookback Rule: The IRS Fixes the Refund Trap for the Unwary – TAS).

To fix the problem discussed in Part One of this blog regarding the apparent need for the IRS to issue notice and demand letters to taxpayers who still have additional time to pay, I strongly recommend that Congress amend IRC § 7508A and treat a disaster relief postponement in the same manner as prescribing tax-related deadlines for all purposes of the Code. We need to resolve this issue across the board rather than one disaster at a time.

In the event Congress decides not to implement that recommendation, Congress should consider amending IRC § 6303(b) to provide that when the Secretary postpones a filing deadline pursuant to IRC § 7508A, the deadline for issuing a notice and demand includes any periods of postponement. The language could be modified as follows:

6303(b) ASSESSMENT PRIOR TO LAST DATE FOR PAYMENT

Except where the Secretary believes collection would be jeopardized by delay, if any tax is assessed prior to the last date prescribed for payment of such tax or the due date postponed pursuant to IRC § 7508A, payment of such tax shall not be demanded under subsection (a) until after the latter of such dates.

Conclusion

As the IRS continues to mail notices with incorrect dates to these taxpayers in the disaster relief areas, it will continue to cause confusion, and I suspect it will increase calls to the IRS and to taxpayers’ return preparers. As the IRS implements the Strategic Operating Plan, there are several initiatives that could minimize or eliminate the communication issues in the future.

* Objective 1.7, Provide Earlier Legal Certainty: The goal is for the IRS to provide earlier legal certainty, so taxpayers have greater clarity to meet their tax obligations.

* Objective 2.3, Develop Taxpayer-Centric Notices: The IRS intends to improve its notices so taxpayers can better understand the purpose of the notice. By providing clear explanations of issues, steps to resolution, and delivering it in ways taxpayers prefer, it should improve the experience and put the focus on taxpayer’s needs.

* Objective 4.6, Apply Enhanced Analytics Capabilities to Improve Tax Administration: The IRS plans to have its employees leverage data and insights to enhance delivery of tax administration and improve the taxpayer experience.

This situation is a perfect example why the IRS Commissioner is prioritizing IRS resources and objectives to provide taxpayers with clear, practical guidance, and utilize taxpayer-focused results as the IRS works to modernize its technology and transform how it works with taxpayers. TAS will continue and work with the IRS in exploring legal and administrative solutions to avoid this confusing, harmful, and bizarre result for taxpayers already dealing with challenges caused by a natural disaster. I will also continue to raise this issue with the tax-writing committees to refine legislative approaches that permanently fix this issue that the IRS can’t fix on its own.

The post NTA Blog: Disaster Relief: What the IRS giveth, the IRS taketh away. Or so it seems for disaster relief taxpayers until you get to page 4 of the collection notice. (Part Two) appeared first on Taxpayer Advocate Service. Thoughts?

Taxpayers living in a disaster area filed their returns early with a balance due, expecting to make a timely payment by the postponed date

In the news... In the news... TAS Tax Tip: What to do if you receive an IRS balance due notice for taxes you have alread...
07/11/2023

In the news... In the news... TAS Tax Tip: What to do if you receive an IRS balance due notice for taxes you have already paid 2023: July 11, 2023 – Know your rights and what to do if the IRS sends you a bill after you already paid your taxes.



TAS Tax Tip: What to do if you receive an IRS balance due notice for taxes you have already paid.



The IRS issues various balance due notices, including Notice CP14, Notice of Tax Due and Demand for Payment. This information will help you if you receive a CP14 from the IRS despite having already paid your taxes in full.

The CP14 is a balance due notice telling you that you owe money for unpaid taxes. The notice requests that a payment be made within 21 days. If the balance due is not fully paid within 60 days, the IRS can proceed with collection activity.

The first thing to know is don’t panic! Taxpayers typically don’t want to hear from the IRS. Sometimes they don’t even want to open the mail from the IRS and in particular don’t want to see a bill for federal income taxes they already paid. Because of a correspondence backlog at the IRS, many payments have not yet been processed. Until that is done, those taxpayers’ accounts reflect balances due even though the taxes have been paid.

What should I do if I receive a CP14 notice by mistake?

* Don’t ignore it. Open it, read it, and keep it in a safe place.

* Verify your taxes were paid. If you have documentation that you have paid the right amount of tax, don’t pay it again.

* Due to the correspondence backlog, your payment may not have been processed yet, so we recommend that you create an online account to monitor the account for your payment to be applied.

* Respond to the IRS. You have 60 days from the date of the CP14 notice to respond, so if the payment isn’t applied to your account AT LEAST TEN DAYS PRIOR to the 60-day deadline, have your information ready and either call the number on your notice or submit your information by mail to make sure you are compliant with the terms of the notice.

What should I do if I made a mistake and the CP14 notice is correct?

It’s in your best interest to pay your tax debt as soon as possible to limit the penalties and interest the IRS may charge.

However, if you can’t pay the full amount by the date on the notice, there are several payment options that might work for your situation. Depending on the type and amount of tax you owe, different options are available, ranging from short term extensions, to installment agreements, to an offer in compromise. Each has different requirements and may have a fee.

You must reply by the date required in the notice or you may lose certain appeal rights.

Where to reply

The notice tells you where to call and where to send your payment or response if the notice is incorrect. Follow the instructions.

What if I want to talk with someone?

Each notice or letter from the IRS should include contact information. The telephone number is usually found in the upper right-hand corner. If a specific employee is working your case, it will show a specific phone number for that employee or the department manager. Otherwise, it will show the IRS toll-free number (800-829-1040).

Note: Live phone support often has long wait times or you may have to call more than once. Responses to correspondence may also have long delays. The IRS has expanded voice bot options for faster services that includes assistance for eligible taxpayers in setting up or modifying payment plans.

The best days to call the IRS are Wednesdays, Thursdays, and Fridays. The IRS advises that wait times are the longest on Mondays and Tuesdays.

Have your paperwork (such as cancelled checks, amended return, etc.) ready when you call.

Wait – I still need help

Letters and notices aren’t always easy to understand. Here are three resources we recommend you use if you need more help:

* The Taxpayer Advocate Service’s Taxpayer Roadmap: The Roadmap shows the steps that got you here and what will happen if you do nothing. Use the ‘Did you get a notice from the IRS?’ look-up feature to find a simplified explanation of why it was sent. Then click on the ‘See notice details’ area to find a fuller explanation of why it was sent, what this means for you and the next steps you should take. It also provides links to related resources.

* The Taxpayer Advocate Service’s Get Help pages: These webpages provide detailed instructions to help you resolve the most common issues. They are grouped by categories. For return processing issues, start with I Got a Notice From the IRS. If you still need more information you can review specific topics that apply to your situation like I Made a Mistake on My Taxes or I Need Help Resolving My Balance Due.

* The IRS’s Understanding Your IRS Notice or Letter page: This page explains why notices are sent and contains a search feature to find your specific notice and related information.

You can generally resolve most notices or letters without help, but you can also get the help of a professional – either the person who prepared your return, or another tax professional.

If you can’t afford to hire a tax professional to assist you, you may be eligible for free or low cost representation from an attorney, certified public accountant, or enrolled agent associated with a Low Income Taxpayer Clinic (LITC). LITCs are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. For more information or to find an LITC near you, see the LITC page or IRS Publication 4134, Low Income Taxpayer Clinic List. This publication is also available online at www.irs.gov/forms-pubs or by calling the IRS toll-free at 800-TAX-FORM (800-829-3676).

If your IRS problem is causing you financial hardship, see Can TAS help me with my tax issue?

TAS Resources

* Issues & Errors Get Help topics

* I Need Help Resolving My Balance Due

* Paying Taxes Get Help topics

* Notices from the IRS

IRS Resources

* Let Us Help You

* Understanding your CP14 Notices

* Creating an Online Account with the IRS



The post TAS Tax Tip: What to do if you receive an IRS balance due notice for taxes you have already paid 2023 appeared first on Taxpayer Advocate Service. Thoughts?

Know your rights and what to do if the IRS sends you a bill after you already paid your taxes. This will help you if you received a CP14.

In the news... In the news... NTA Blog: Disaster Relief: What the IRS giveth, the IRS taketh away. Or so it seems for di...
07/11/2023

In the news... In the news... NTA Blog: Disaster Relief: What the IRS giveth, the IRS taketh away. Or so it seems for disaster relief taxpayers until you get to page 4 of the collection notice (Part One): July 11, 2023 – Imagine you live in a county that has been battered by storms or wildfires so severe that the federal government has included your county in a disaster declaration. Imagine that the IRS grants you an extra four or six months to file your tax return and make your tax payment. Then imagine you file your return early but properly decide to hold off on making payment until the postponed deadline. That is what an estimated one million taxpayers living in California and seven other states (Alabama, Arkansas, Florida, Georgia, Indiana, Mississippi, and Tennessee) have done in the last few months. To their surprise and dismay – and contrary to IRS guidance and press releases – those taxpayers are now receiving “notice and demand” collection letters from the IRS telling them their payments are currently due and the IRS will begin to charge interest and penalties if the taxpayer doesn’t pay by a specified date on the notice which is months earlier than IRS guidance permits. Confused taxpayers and practitioners are wondering why they are receiving a balance due notice since they live in a disaster relief area and had months of additional time to pay.

Short answer: Disaster area taxpayers can ignore the CP14 collection notice. The payment due date on the collection notice is wrong. The correct payment due date is stated on the disaster declaration. Taxpayers can verify the correct payment due date by checking irs.gov.

If you want to understand this perplexing situation, read on, but it involves several twists and turns.

Unfortunately, the answer lies in a combination of complex laws, inflexible technology, and confusing collection notices that created a toxic brew. By law, your tax liability is deemed “assessed” when the IRS processes your tax return, then the IRS is generally required to send a “notice and demand” for payment of tax within 60 days of the assessment. The IRS believes this is true even if a disaster declaration gives you more than 60 days after filing your return to pay the tax. To make matters worse, the IRS can’t quickly change the main text of its collection notice to avoid confusion. The IRS’s solution: Include a short paragraph on page 4 of the notice that essentially says never mind – ignore the 3 pages you just read. Now the IRS is sending follow-up letters to these taxpayers acknowledging that payment is not due until the date specified on the disaster declaration.

What to Know If You Received an Erroneous Collection Notice While Living in a Disaster Area

Many taxpayers who live in disaster areas are confused and frustrated because the IRS sent them a collection notice and demand for tax payments with an incorrect due date. In technical terms, the IRS based its decision on its legal interpretation of its obligation to issue a “notice and demand” within 60 days of an “assessment.” Compounding the problem is the IRS’s inability to quickly redesign its forms or reprogram its information technology (IT) systems to provide more accurate information.

In the beginning of 2023, the IRS postponed deadlines for filing tax returns and making tax payments until October 16, 2023, for taxpayers affected by severe weather in parts of California. In two California counties, Modoc and Shasta, the filing and payment date was postponed until August 15, 2023. The IRS also postponed due dates for seven other states, which was a welcome relief to millions. (See NTA Blog: Disaster Relief: What to Know If You’ve Been Affected by a Federally-Declared Disaster and the Recent Additional Time Provided For Parts of Alabama, California, and Georgia).

So far, over one million taxpayers living in a disaster area filed their returns early with a balance due, expecting to make a timely payment by the postponed date. Unfortunately, for taxpayers covered by a disaster declaration, the IRS followed its normal collection procedures and mailed an initial collection notice and demand, Notice CP14. These collection notices reflected an incorrect due date. The notices provided 21 days (ten days for taxpayers with balances of $100,000 or more) to pay the balance even though payment was not required prior to August 15 or October 16. The collection notices also informed the taxpayers that interest and penalties would accrue after the due date reflected on the front page of the notice. All of this is wrong for taxpayers covered by disaster declarations. To remedy the incorrect date, the IRS included a short paragraph on the back of page 4 of the Notice CP14. However, the additional language did not solve the problem. Instead, it led to confusion and questions.

Understanding Why the IRS Sends Notice and Demand for Payment

It might help to understand why the IRS sent a notice and demand for payment. IRC § 6303(a) requires the IRS to send a notice and demand for payment as soon as practicable, and within 60 days of assessing a tax (e.g., where a taxpayer files a balance due return) to initiate the collection process. The IRS uses Notice CP14 to meet this requirement. The notice and demand includes a deadline to pay because under IRC § 6601(e)(2)(A), the IRS does not charge interest if the amount owed is paid within 21 days (ten days if the amount owed exceeds $100,000). Because of these deadlines, the general IRS practice is to send out a Notice CP14 as soon as a tax return is filed, tax is assessed, and amounts are due. Taxpayers in declared disaster areas are not required to pay until the postponed deadline. But because there was a filed return, an assessment, and a balance due, IRS systems automatically sent a notice and demand for payment within 60 days of assessing a tax. The IRS did not reprogram its system to generate the notice based upon the postponed payment due date for disasters.

In the future, when the IRS postpones filing and payment deadlines for taxpayers affected by disasters, I recommend the IRS reprogram its systems to delay the issuance of the notice, including Notice CP14 mailings, or provide the correct due date on page one of the notice. Instead of reprograming its systems, the IRS mailed a Notice CP14 even though the payments were not due until the postponed date of August 15 or October 16. The IRS attempted to explain early CP14 notices to taxpayers covered by a disaster declaration who filed their balance due return in a brief paragraph on page 4. The inserted language, however, still resulted in additional confusion for many who contacted the IRS, TAS, and their return preparers. The IRS takes the position that it is required to issue the notice and demand within 60 days of the assessment and contends that the postponement of time for payment of tax under IRC § 7508A does not change the last date prescribed for payment of tax in IRC § 6303(b).

More immediately, assuming the IRS continues to believe it must send the CP14 notice, I strongly encourage it to include a first page that says, in large type, that it is sending this notice to comply with a legal requirement but that taxpayers living in a disaster area have until the date specified in the disaster declaration and will not face interest charges or penalties if they pay by the postponed date. If the IRS puts that language on page 1 in large type instead of on page 4 in small type, it could avoid much of the confusion.

Conclusion

The difficulty of reprograming the antiquated IRS IT systems to modify the Notice CP14 mailing date or payment due date is yet another example of the urgent need to update IRS technology, as I discussed in my March 16, 2023, blog (NTA Blog: National Taxpayer Advocate Urges Congress to Maintain IRS Appropriations But Re-Direct Some Funds Toward Taxpayer Service and Information Technology Modernization) and my April 6, 2023, blog (NTA Blog: IRS Strategic Operating Plan Has Potential to Transform Tax Administration).

In my next post, I will discuss what these taxpayers can expect and provide legislative recommendations to avoid future unintended consequences from disaster declarations. Stay tuned for Part Two!

The post NTA Blog: Disaster Relief: What the IRS giveth, the IRS taketh away. Or so it seems for disaster relief taxpayers until you get to page 4 of the collection notice (Part One) appeared first on Taxpayer Advocate Service. Thoughts?

Confused taxpayers and practitioners are wondering why they are receiving a balance due notice since they live in a disaster relief area

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Sunday 10am - 2pm

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+18669841040

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Virtual Veterans Connect 2nd Thursday of Every Month
February 10, 2022 | 6 pm - 7:30 pm EST

Grow your business, build your network and learn about resources that will take you and your business to the next level. Connecting you with other business owners looking to scale and grow your businesses. Register Now: https://bit.ly/3pAPn8S

Learn about Record-Keeping Tips to Keep the IRS Away from WEBS Tax Preparation & Bookkeeping Services



Agenda:
6:00 - 6:05 - Intro to Veterans Connect
6:05 - 6:20 - WEBS Tax Preparation & Bookkeeping Services
6:20 - 7:20 - Break Out Rooms (15 min Rotation)
7:20 - 7:30 - Close Out
Welcome our newest member WEBS Tax Preparation & Bookkeeping Services to the family!

They offer a unique, educational and cost effective experience for small to mid-size businesses, by providing the best Tax, Bookkeeping, and Notary Services to reach your business goals.

https://www.webstaxprep.com/
One week left to vote! Check out the inspirational veteran, active-duty, and military spouse-owned small businesses selected for the PenFed Foundation VEIP Ignition Challenge.

Then, vote for your favorite. The top three will advance to a pitching competition for a chance at a $25,000 award. https://veip.penfedfoundation.org/poll/

Youth Enrichments / WEBS Tax Preparation & Bookkeeping Services / Uncharted Territory Solutions / Outpatch / MilkSpace, LLC / Jammin' Together / Dope Coffee / CG1 Solutions / bugr.io / Baret Baseball Goods / abacrop / Words Unite Bookstore

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