Neal, Pascrell: IRS Must Stop Sending Erroneous Notices

February 19, 2021

The Honorable Charles P. Rettig
Commissioner
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, D.C. 20224

Dear Commissioner Rettig,

We write today regarding the Internal Revenue Service (IRS) again erroneously sending notices to taxpayers. The Committee on Ways and Means (Committee) has sent you multiple letters on this topic, and we are dismayed that the IRS continues to send incorrect notices to hard-working Americans, many of whom are struggling through severe health and economic crises as a result of the pandemic. The IRS must immediately cease mailing erroneous notices that impose unnecessary and confusing burdens on taxpayers.

Yesterday, we learned that the IRS sent approximately 260,000 CP59 notices to taxpayers who the IRS claimed did not file a 2019 tax return. The IRS continues to have a staggering backlog of unprocessed 2019 tax returns that, most recently, was reported to include nearly 7 million unprocessed individual tax returns. In light of these severe processing delays, it is very likely that many taxpayers receiving CP59 notices already filed the returns that the IRS claims are outstanding. For taxpayers who have dutifully complied with their filing obligations, these notices impose unnecessary stress and sow confusion. For IRS employees, these notices create unnecessary work while they struggle to meet the current demand.

As noted above, this is not the first time that the IRS has sent taxpayers incorrect notices in the last year. In June 2020, the Committee sent you a letter about 1.5 million balance due notices sent with incorrect dates. In August 2020, the Committee wrote to you about additional notices sent to taxpayers who had made timely payments that remained unopened in the IRS's mail backlog. In that letter, the Committee asked that the IRS suspend sending notices until the agency had worked through its substantial backlog. In October 2020, we wrote to you about erroneous revocation notices sent to more than 30,000 tax- exempt organizations. Copies of these letters can be found here, together with copies of letters sent to the Treasury Inspector General for Tax Administration about these erroneous notices. Further, we recently learned that the IRS mistakenly sent over 100,000 erroneous notices, based on 2007 return information, telling taxpayers that their economic impact payments had been offset. Enough is enough. Taxpayers deserve better, and the IRS needs to do better. These repeated errors constitute a massive failure of leadership at the highest level.

Accordingly, we urge the IRS, one more time, to pause sending notices to taxpayers who may be impacted by IRS backlogs. Such action is particularly necessary now, given the closure of two IRS service centers this week due to extreme weather conditions. The IRS should not resume sending notices to taxpayers until all 2019 tax returns have been processed, the IRS's backlog has been reduced to pre-pandemic levels, and taxpayer accounts have been updated. At such time, the IRS should carefully review any notices before sending to ensure that they are correct and timely and that taxpayers are in no way being penalized for delays that resulted through no fault of their own. The Committee will be carefully monitoring the agency's next steps in this regard.

Thank you for your prompt attention to this matter.

Sincerely,

The Honorable Richard E. Neal, Chair
Committee on Ways and Means

The Honorable Bill Pascrell Jr., Chair
Subcommittee on Oversight