The Internal Revenue Service (IRS) is currently experiencing a backlog of over 5 million pieces of mail, about half of what it was a few months ago, stemming from pandemic-induced stoppages in operation. This includes roughly 2.5 million hard copy tax returns that have gone unopened, according to IRS Commissioner Charles Rettig.
The backlog become a larger issue back in March following facility closures due to Covid-19 shutdowns. During this time, a reported 11 million pieces of unopened mail had accumulated including paper-filed tax returns, paper checks, filing extension requests, and communication from taxpayers responding to IRS notices. The agency is opening about 1.3 million pieces of mail a week while still receiving 300,000 to 500,000 each week.
Commissioner Rettig estimates that the backlog could be cleared within a month or two.
Laura Baek, a senior attorney advisor for the Taxpayer Advocate Service, said that some taxpayers have received deficiency notices or have had improper penalties assigned to them because the IRS hasn’t opened their mail. Because of this, the agency is trying to offer relief in these instances.
The IRS is trying to be reasonable when it comes to penalties assessed. The agency realizes that it may not be the fault of the taxpayer with so much backlog of mail still to open.
For example, taxpayers who filed a hard copy extension request and then afterward e-filed their return, that person may have received a failure-to-file penalty. The IRS said it will methodically abate the late-filing penalties once paper-filed extensions are processed.
Similarly, the IRS will decline late-payment penalties that may have been assessed on individuals who mailed in a check to cover tax obligations by the extended July 15 due date. Ms. Baek said that taxpayers should not cancel their checks and should make sure they have the sufficient funds in their bank accounts to anticipate when the IRS will process their payments to avoid additional penalties and interest.
If you are receiving late-payment or failure-to-file notices from the IRS and need assistance, please contact your McCarthy Lebit tax attorney immediately to discuss your options. Our attorneys are available at 216-696-1422.