On June 30, 2020, I wrote about the IRS’s decision to send millions of pieces of mail with the wrong dates and how that would cause a myriad of problems. Congressman Neal was also following the news that the IRS was sending out incorrect notices. In recent correspondence he built on the problem of the first batch of incorrect correspondence to address a second issue arising now with IRS letters that contain the right dates but are wrong, because the taxpayers have already addressed the problem causing the letters to be sent.
Congressman Neal’s letter addresses the fact that a number of taxpayers are receiving notices from the IRS regarding past due payments at a time when the taxpayers made the payments and mailed them to the IRS during the pandemic. These payments constitute part of the 12 million pieces of unopened correspondence waiting for IRS workers when they came back to work after being off for almost four months due to the pandemic. These notices now cause the taxpayers to try to reach the IRS to explain that the check is in the mail sitting on trailers at the IRS service centers. The effort the IRS must put in to send the notices, the anxiety the notices cause and the effort to contact the IRS to explain that the money was sent are adding to an already bad situation. Congressman Neal asks that the IRS stop sending out notices until it works through the backlog of mail and reduces it to pre-pandemic levels and taxpayer accounts updated.
On June 10, 2020, I wrote about a similar problem happening because of the delay in the Tax Court opening its mail which causes the IRS to make premature assessments thinking that the taxpayer has not filed a Tax Court petition.
In addition to the problem that Congressman Neal identifies as a reason for holding off on collection notices until the backlog has been worked, in the backlog of mail are offers in compromise and requests for innocent spouse relief. While these requests are not the same as payment, they are requests that should cause the IRS to stop collection. For a taxpayer who sent in an offer in compromise request in April, the IRS does not yet know that an offer is pending and will not know until it works through its backlog of mail. If it turns on the collection spigot before working through the backlog, it will start making levies and sending collection notices to someone who tried to address their collection problem during the pandemic. The levies and the collection notices will cause hardship and anxiety among taxpayers who used the downtime to try to address their tax problems.
My clinic submitted several offers. Must I tie up the IRS phone lines now and tell someone that an offer was submitted in April and ask that the IRS not begin collection again on my client? If I don’t call and the IRS has turned the collection spigot back on before processing the mail backlog, will it levy upon my client without warning, because the notice of intent to levy had issued before the pandemic shut down the IRS?
The idea of Congressman Neal’s letter, that the IRS should not start moving forward to take collection action until it knows what happened when it shut down, is exactly the right idea. While he lists only one of the reasons for adopting that approach, several exist. The pandemic is not the fault of the IRS. The pandemic places the IRS in a tough situation; however, it should adapt to the pandemic in ways that do not harm taxpayers and do not cause it to do unnecessary work. Open the mail. Update the system. Then start up the collection process, so much of which is automated. Without opening the existing mail, the IRS computers blindly send notices to many taxpayers who have taken steps to comply. Rather than take the attitude that the number of taxpayers who sought to comply is a relatively low percentage of the taxpayers with outstanding liabilities, the effort should be to get the next steps right even if it takes a little longer before gearing back up to collect.