IRS Sends Incorrect Payment Due Notices to Taxpayers

The IRS building is seen in Washington, on Sept. 28, 2020. (Erin Scott/Reuters)

The Internal Revenue Service (IRS) has sent out millions of letters demanding payment of taxes owed, with many of them featuring incorrect information.

The IRS said in a statement obtained by The Epoch Times that it had sent taxpayers a number of CP-14 letters—notices that they owe money on unpaid taxes.

But some of these notices have an incorrect payment date listed, the IRS acknowledged.

“The IRS apologizes to taxpayers and tax professionals for any confusion as we continue to review the situation,” the agency said in the statement.

The tax agency noted, however, that these letters include a special insert that features the correct payment deadline, which was extended under special tax relief to taxpayers in federally declared disaster zones.

“These letters include a special insert that notes the payment date listed in the letter does not apply to those covered by a disaster declaration, and the disaster dates remain in effect,” the IRS said.

Disaster-Related Deadline Extensions

Earlier this year, taxpayers in federally declared disaster regions—like one hit by deadly winter storms—were granted tax relief by the IRS in the form of an extension on their deadlines to file their tax returns and pay amounts due.

The IRS issued a series of notices granting such relief to taxpayers affected by severe weather in parts of Alabama, California, Florida, Georgia, Indiana, New York, and Tennessee. The deadline extensions varied across different disaster areas, with relevant parts of Florida, for example, getting an extension until Aug. 15, while Tennessee storm victims had theirs extended until July 31.

Disaster-area taxpayers in most of California, as well as parts of Alabama and Georgia, were granted an extension until Oct. 16 to file their tax returns and make tax payments.

It’s taxpayers in these areas—in particular California—that have been bombarded with CP-14 balance due notices with erroneous deadlines, per reports.

One such notice cited by the San Francisco Chronicle was received by Deborah Hill of Oakland, which featured a June 26 due date (rather than the extended Oct. 16 deadline).

“If we don’t receive a full payment of the amount owed by this date, additional penalties may apply to your account. Penalties can be as high as 50 percent or more of the tax you owe,” the notice read, according to the report.

Richard Pon, a San Francisco CPA, told the outlet that he had heard from six clients who received incorrect notices.

One of the clients told Pon that they had contacted an IRS customer service agent and was incorrectly told that they should have waited to file until Oct. 15 to qualify for delayed payment under the disaster tax relief program.

Amid the confusion, the IRS issued a clarifying statement.

“The IRS reassures California taxpayers that they continue to have an automatic extension until later this year to file and pay their taxes for those covered by disaster declarations in the state,” the IRS said.

The tax agency also said that the current CP-14 mailings being sent out are part of a legal requirement, and even though the notices say taxpayers need to pay within 21 days, the actual deadline for those in disaster zones is in October.

More Details

Many California tax professionals cited by Forbes said that the problem mostly affects taxpayers who filed their taxes before this year’s April 18 filing deadline.

Normally, extensions give taxpayers more time to file their returns after the deadline, but any taxes owed are still supposed to be made by the original deadline, with late payments subject to interest and penalties.

But in the case of disaster relief extensions, the deadline for paying taxes owed was also pushed back.

However, the IRS by law has 60 days to issue a demand for payment as soon as a balance due tax return has been processed.

It would appear that the IRS' systems had trouble dealing with the nuance of the special disaster-related extensions for taxes owed and the statutory balances due notification requirements.

This means that when disaster-relief eligible tax returns were filed before the April 18 deadline and assessed, the IRS started sending balances due notices 60 days after the taxes were assessed without regard for the deadline extension.

“The current mailings being received by some taxpayers, the IRS Notice CP-14, are for taxpayers who have a balance due, and they are sent out as a legal requirement,” the IRS said in the statement.

The IRS said that the “special inserts” included with these letters are meant to clarify that the actual taxes owed due date falls later than the date in the notice.

The IRS did not respond to a request for comment and further clarification on the issue from The Epoch Times.

This is not the first time the IRS has sent out CP-14 notices with incorrect information.

In July 2022, for example, the agency said that some payments made on tax returns weren’t correctly applied to joint taxpayer accounts and so these taxpayers were receiving erroneous balance due notices.