IRS to Temporarily Halt Tax Notices for Balances Due

Any taxpayer who has ever had to settle a dispute with the Internal Revenue Service (IRS) knows the frustration of receiving a second tax notice just weeks after mailing in a check. With the IRS currently slowed by personnel shortages and other hurdles resulting from the pandemic, this scenario has been all too common. Despite the most recent progress in the backlog of work, the IRS has admitted that there is still a tremendous inventory of unopened correspondence to sift through.

To address the problem and quell taxpayer dissatisfaction, the IRS has made a temporary policy change. On August 21, 2020, the IRS issued a statement that they were placing a temporary moratorium on the issuance of certain notices for balances due.  

The three most common notices issued to taxpayers who owe money to the IRS that are sent after the initial notice of tax due is sent (Notice CP14) are the following: 

• CP501: Issued when the taxpayer has not responded to the IRS’ initial notice of underpayment.

• CP503: Issued as a follow-up to the CP501, when no response has been received.

• CP504: The most serious of the three, CP504 is issued to announce the IRS’ plans to pursue a judgment against the taxpayer and have their accounts levied to settle unpaid debts.  

The IRS has stated that it will continue to monitor the unopened correspondence to determine the right time to resume sending these notices. They have not placed a definitive date on this reversal. Taxpayers are still encouraged to respond promptly to any CP14 notices they may receive during this period, as well as any other tax notices not listed above.  

While the IRS continues to sort through the surplus of mail, they urge taxpayers to remain patient, not to cancel checks, and ensure that available funds remain in their accounts. Relief from penalties and interest will be provided to any taxpayers who sent in checks that were not timely cashed between March 1 2020, and July 15, 2020 and subsequently dishonored by their bank. Furthermore, the IRS has promised to credit amounts paid to taxpayers’ accounts on the original date received by the IRS, and not the date processed. 

If you receive a tax notice, please do not ignore it. Please reach out to your Citrin Cooperman advisor.