Backlog Forces the IRS to Stop Mailing Automatic Collection Notices

Ethen Kim Lieser

Federal Taxes,

National Taxpayer Advocate Erin Collins told a House committee that the IRS will have “extraordinarily high” delays this year.

With millions of unprocessed tax returns from 2020 to sort through and acute staffing shortages, the Internal Revenue Service (IRS) has decided to suspend the mailing of automatic collection notices that are often triggered when the agency’s records show that a taxpayer owes tax and has not filed a return.

“IRS employees are committed to doing everything possible with our limited resources to help people during this period,” IRS Commissioner Chuck Rettig said in a statement.

“We are working hard, long hours pushing creative paths forward in an effort to be part of the solution, rather than the problem. Our employees continue to expend every effort to balance a confluence of multiple, unprecedented demands—including successfully starting the filing season, working our inventory of unprocessed tax returns as well as looking for additional ways to minimize burden for taxpayers, tax professionals and businesses,” he continued.

Here is the full list of individual taxpayer notices that are being temporarily suspended:

• CP80, Unfiled Tax Return
• CP59 and CP759, Unfiled Tax Return(s) — First notice
• CP516 and CP616, Unfiled Tax Returns — Second notice
• CP518 and CP618, Final Notice — Return Delinquency
• CP501, Balance due — First notice
• CP503, Balance due — Second notice
• CP504, Final Balance Due Notice — Third Notice, Intent to Levy
• 2802C, Withholding Compliance Letter

The agency acknowledged that some taxpayers might still receive these notices over the next few weeks. However, there is no need to call or respond to the notice.

The IRS added that it will “continue to assess the inventory of prior year returns to determine the appropriate time to resume the notices.”

Delays Becoming the Norm

Earlier this week, National Taxpayer Advocate Erin Collins told a House committee that the IRS will have “extraordinarily high” delays in processing returns once again this year. Filing a paper return, she said, remains “at the heart of the agency's challenges and processing tax returns.” But with more than 3 million returns that must be manually scanned, transcribed, and processed, paper returns have become the agency’s “kryptonite.”

In a recent report to Congress, Collins added that she is “deeply concerned about the upcoming filing season.” The remaining pile of tax returns is from the “most challenging year taxpayers and tax professionals have ever experienced.”

All Hands on Deck

In response to these challenges, the IRS said last week that it was reassigning 1,200 employees to work on the massive backlogs.

“This is an all-hands-on-deck situation to help people as quickly as possible and reduce the stress on employees who have been and continue to face unprecedented levels of inventory to be worked,” IRS Commissioner Chuck Rettig said in an email to employees last week.

Collins also noted that a recent effort to hire for 5,000 positions wasn’t even able to draw 200 applicants.

Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters.