September 8, 2020

IRS Acknowledges Delays in Processing Payments: Promises Penalty Relief

By Benjamin Dailey, Partner, Tax & Business Services & Ronald Finkelstein, Partner, Tax & Business Services

IRS Acknowledges Delays in Processing Payments: Promises Penalty Relief Tax Advisory Services

Many individual taxpayers who made payments well in advance of the July 15 deadline are surprised to find that their checks have not yet cleared their bank accounts. Some have also received notices indicating that a balance is still due. These notices have caused a great deal of anxiety for taxpayers being hit with penalties despite having done everything correctly.

On August 24, the IRS issued an explanation for the delays in payment processing and wants taxpayers to know any payments made by check could still be sitting unopened in the backlog of mail at IRS service centers. COVID-19 has significantly hurt the Service’s ability to process paper returns, payments, and correspondence.

If you are one of the taxpayers affected by this, do not cancel your original check or send a second check to pay the balance due with the notice. If you end up double-paying the balance due with your return, it may be a long time before you receive a refund.

Here is what you can do to help the IRS process your payment as efficiently as possible in the future:

  • Make your payments electronically through IRS Direct Pay for Individuals or the Electronic Federal Tax Payment System (EFTPS) for other taxpayers.
  • Have your balance due and estimated tax payments initiated electronically through ACH debit when you file your return. Your accountant at Marcum can help with this while we are preparing your return.
  • If you have to pay with a check, make sure to include your SSN (or EIN) on the check, the tax year, and the form number. This will help the IRS process the payment in case the check is separated from the return or payment voucher.
  • Send check payments certified mail, return receipt requested, to document timely payment.

The IRS is asking for your patience during this time. They promise payments will be processed as quickly as possible and will be posted as of the date received (rather than the date of processing).

If there are any questions related to this Tax Flash, please contact your Marcum tax advisor.