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July 19, 2023 at 10:29 AM
Taxpayers in disaster areas who thought they’d gotten tax relief from the IRS are now faced with “notice and demand” collection letters from the agency.
National Taxpayer Advocate Erin Collins explained in a recent blog post that these notices were erroneously sent out due to the “difficulty of reprograming the antiquated IRS IT systems,” yet another example “of the urgent need” to update IRS technology.
The agency attempted to remedy the error by including a “short paragraph on the back of page 4″ of its notice. “However, the additional language did not solve the problem,” Collins said. “Instead, it led to confusion and questions.”
In the beginning of 2023, the IRS postponed deadlines for filing tax returns and making tax payments until Oct. 16, 2023, for taxpayers affected by severe weather in parts of California, Collins explains.
In two California counties, Modoc and Shasta, the filing and payment date was postponed until Aug. 15, the blog states.
The IRS also postponed due dates for seven other states — Alabama, Arkansas, Florida, Georgia, Indiana, Mississippi and Tennessee.
Instead of reprogramming its systems, the IRS mailed a Notice CP14 even though the payments were not due until Aug. 15 or Oct. 16.
The agency “attempted to explain early CP14 notices to taxpayers covered by a disaster declaration who filed their balance due return in a brief paragraph on page 4,” according to Collins.
The collection notices also informed the taxpayers “that interest and penalties would accrue after the due date reflected on the front page of the notice,” Collins wrote. “All of this is wrong for taxpayers covered by disaster declarations when the original due dates fall within the postponement period.”
An estimated one million taxpayers in California and the seven other states, Collins explained, filed their return early “but properly decide to hold off on making payment until the postponed deadline.”
