Back on April 15, which used to be a really important date, I wrote about IR-2020-59 in which the IRS announced that it was suspending collection actions of various sorts until July 15. I spoke with E. Martin Davidoff Partner in Charge-National Tax Controversy at Prager Metis. Marty just alerted me to a new development as we approach the end of the grace period on July 15.
Warning
Erin M. Collins, National Taxpayer Advocate, issued a warning that when the notices start flowing the dates on them will be wrong.
“During the shutdown, the IRS generated more than 20 million notices; however, these notices were not mailed. As a result, the notices bear dates that now have passed, some by several months, and some of the notices require taxpayers to respond by deadlines that also have passed.”
The envelope the notices come in will have an insert with a message that is supposed to reassure you.
“Due to the challenges of the ongoing Coronavirus Disease 2019 (COVID-19) Pandemic, we were unable to mail the notice included in this envelope on the date listed on the notice. In addition, the date on the notice by which you are asked to pay may have already passed by the time you receive it. Do not be concerned about these dates.”
There are further details depending on the type of notice.
All Sorts Of Notices
Advocate Collins continues:
“There are several dozen kinds of IRS notices ready to be mailed in the next month or two. As the mailing and response dates have passed, the IRS is establishing new response dates. For business reasons, the IRS is not revising the generated notices. Rather, it is enclosing an “insert” in its mailings, which consists of an additional page at the end of the notice that provides updated due-date information. For that reason, taxpayers who receive these notices may be confused and distressed, believing they missed response deadlines. Thus, it is critical that taxpayers and representatives read through all pages included in IRS notices and pay special attention to the due dates on the insert.”
What A You Know!
I may seem a little harsh and judgmental here, but it is more of an observation based on forty years of experience. Although anybody can get these sorts of notices, a lot of the people who tend to receive them don’t have their act together.
If one in one thousand does not notice the insert (I think it will be more), that is 20,000 very stressed out people. Seriously, it might put a few of them over the edge. This is cruel. IRS should mulch those GD notices with the wrong dates and print new ones. It will make for less trouble in the long run.
There Are Soft Due Dates And Hard Due Dates
On a practical level, some of the due dates are really not that important. If there is a math error on your return and you agree with it, you just send in a check. The notice is going to say you are sending it in late, but it will end up being a no harm, no foul sort of thing.
Other types of notices set pretty unforgiving deadlines to make filings in order to preserve your rights. Marty discussed those involving a “Notice of Intent to Levy” (i.e. We will be coming to take your stuff).
I advise that people receiving IRS notices:
- Open them promptly;
- Retain the envelope showing the postmark from the date of mailing;
- Record carefully the date received;
- Carefully read the entire notice and any inserts in the package; and
- And be sure that they respond timely to the notice. Often the response will be to file a form 12153, which is a request for a Collection Due Process (“CDP”) hearing.
In responding to the IRS Taxpayers should consider retaining a tax professional to provide knowledgeable representation.
Note that most of these notices are computer-generated. So, not only are the notices dated incorrectly, the incorrect dates will appear in IRS Account Transcripts for the clients. This will be a future challenge by the IRS to correct their records.
Notice And Demand
I also heard from Keith Fogg of Procedurally Taxing
“One of the notices she mentioned was notice and demand. This notice, according to IRC 6303 should go out within 60 days of the assessment. For assessments made early in the shut down the 60 days will have passed. The failure to send the notice does not impact the validity of the assessment but does mean that the federal tax lien does not arise until after the sending on the late 6303 notice. For most people, this will not matter but there could be transfers that occurred that are impacted by the failure of the FTL to arise at the time of assessment. I doubt many recipients will understand what the late 6303 notice means.
Notices like the math error notice and the CDP notice could create significant confusion regarding relatively short time periods and when the clock starts ticking. Since IRS letters regularly fail to bear a date on which the IRS actually mails the document, it will be very hard, I suspect to know from the insert when the 30 or 60 day period starts. In the CDP area, the Weiss case holds that it is the date of mailing and not the date of the notice that is important but it can be difficult to know when the IRS mails a document. Lots of room for problems here with legally significant documents that impact assessment or impact remedies. I am surprised that it is more cost-effective to mail outdated documents rather than to throw the outdated documents in the recycling bin and mail out fresh documents.”
I tend to agree with Keith. I think the dumpster fires to get rid of the misdated notices will not be nearly as bad as those created by mailing them.
Other Coverage
Kelly Erb confirmed that some of the notices are arriving with the slips of papers advising about the date problem. By the way, Kelly has been doing a tremendous job in keeping up with the latest developments that are of practical interest to large numbers of people. I really appreciate it in that it leaves me free to cover people like Kent Hovind, who think the Flintstones are a documentary.