Don’t Panic Over IRS Late Notices

If you receive a notice from the IRS, notifying you that your payment is late and assessing you with a penalty, don’t panic just yet. This situation is common this year, and in many cases does not actually indicate a problem with your return.

When the economy shut down in March and millions of workers went home, mail began to pile up in mail rooms around the country. The IRS is no different. In fact, as of this summer over 11 million pieces of mail were sitting in their offices, awaiting processing.

Many of those envelopes contain tax returns and payments which were mailed by the July 15 deadline, but the backlog of work has prevented timely processing. So your check or money order might very well be sitting in an IRS office right now, and has not been credited to you.

Automatically generated notices, notifying taxpayers of missing returns and payments, have begun to arrive in mailboxes around the country. But in most cases, this is simply due to a communication mix-up. The IRS is aware of the problem, and so far we know that:

• If your return was filed and payment sent before the July 15 deadline, any late penalties will be waived
• If you filed your return and payment via certified mail with a tracking number, you can use that tracking number to prove timely filing
• When your payment is deposited you will be able to present a copy of the certified check to the IRS, to prove that you did pay your taxes

If one of these late notices does land in your mailbox, don’t panic. Contact your tax professional right away, and they might be able to clear up the problem for you. Otherwise, you can call the IRS to discuss the situation. In most cases the problem will clear up when your payment is finally deposited. Don’t cancel the check, because it could trigger a bad check fee when they try to deposit it.

Finally, if you paid by money order that included a 60-day limit, you might have to submit another payment.

The bottom line is that most of these cases will work out over time, as the IRS catches up on their backlog. Don’t panic, but do be proactive to clear up your case. Only those who truly filed a late payment will actually owe a penalty.