National Tax Representation Company, TaxAudit, Informs Taxpayers Who Owe Federal Tax to Consider Their Payment Options

Taxpayers Who Owe Federal Tax May Soon Receive Reinstated IRS Collection Notices

FOLSOM, Calif., June 20, 2023 /PRNewswire-PRWeb/ -- IRS Resumes Automated Collection Notices That Were Placed on Hold During the Pandemic

National Tax Representation Company, TaxAudit, Informs Taxpayers Who Owe Federal Tax to Consider Their Payment Options

The COVID-19 pandemic had a distressing impact on the lives of people, businesses, and government agencies around the world. Even the IRS was not immune, and the agency experienced an unprecedented shutdown. Coupled with budgetary constraints, a shrinking workforce, and antiquated infrastructure, the IRS fell exponentially behind. Millions of unprocessed returns and other correspondence, such as undeposited taxpayer payments and replies to audit and collection notices, languished in storage containers. To allow time to process the mountain of backlogged returns and correspondence, the IRS announced the suspension of certain individual and business letters and notices sent out by the IRS Automated Collection System (ACS) on February 9, 2022. (The ACS is the primary computerized inventory system that regularly mails notices to taxpayers who did not file a return or who owe taxes. These correspondences can include notices of lien and levy.)

This notice suspension gave millions of taxpayers with outstanding balances a much-needed reprieve from receiving notices of lien, levy, and demands for payment during the uncertain days of the pandemic. However, the breathing room did not cease the accrual of penalties or the interest on the unpaid balances, which have continued to compound daily.

Still, the reprieve could not go on forever. In late May, the IRS Automated Collection System (ACS) began mailing automated collection notices to taxpayers who owe federal taxes or have not submitted a prior-year tax return. Instead of issuing tens of millions of notices in one fell swoop, the IRS plans to incorporate a staggered mailing approach.

Most taxpayers who have an outstanding tax liability will first receive a CP14, Notice of Tax Due and Demand for Payment. IRS CP14 gives taxpayers 21 days to pay the balance due, set up a payment plan, or enter into an alternative agreement based on the taxpayer's facts and circumstances. Unfortunately, the first batch of notices sent to taxpayers did not go as smoothly as the IRS had hoped. Scores of CP14 notices were sent to California taxpayers who are still under tax relief from the 2023 severe winter storms. Keep in mind that, at their discretion, the IRS may grant taxpayers and businesses who have been affected by a federally declared disaster relief from filing and paying income taxes for a period of up to one year.

Taxpayers affected by the 2023 California winter storms now have until August 15/October 16 to file and pay their outstanding taxes, depending on their residing county.

When discussing the reinstatement of ACS notices, Arnold van Dyk, Esq., Director of Tax Services at TaxAudit, said, "We already see many individuals struggling financially with inflation, and the added stress of tax debt will affect millions more Americans. It is important for taxpayers to know they have options and rights when attempting to resolve their tax liability."

The tax debt relief solutions available to taxpayers include various Installment Agreement plans, requesting a Short-Term Payment plan that allows taxpayers up to 180 days to pay in full, or submitting an Offer in Compromise. Those in financial dire straits may qualify to have their account placed in Currently Not Collectible status. This status puts a temporary hold on payment requirements and most collection actions, such as a wage garnishment or bank levy, until the taxpayer's financial situation improves. To qualify, taxpayers may need to provide the IRS with specific financial information. Keep in mind the delay does not stop the accrual of interest or penalties, and the IRS may file a Notice of Federal Tax Lien on the taxpayer's assets. The good news is the statute of limitations on collections does not stop while an account is placed in Currently Not Collectible status. Generally, the IRS has ten years from the date the tax is assessed to collect the balance due.

It is one thing for people to know their rights as a taxpayer and have a basic understanding of the various payment plans available. But it is another thing entirely to determine their best course of action given the complexities of the tax rules and regulations and how they interplay with a person's unique financial circumstances. Being proactive and settling tax debt before the situation reaches the point of crisis is the best gift a taxpayer can give themselves – and reaching out to tax professionals with the expertise on how to navigate the complexities of tax resolution can make all the difference.

Media Contact

Danielle Miranda, TaxAudit, 1 916-904-8062, media@taxaudit.com

SOURCE TaxAudit