The IRS has temporarily suspended the mailing of notices CP501, CP503 and CP504, the agency said, so as not to confuse individuals who may have already responded to the IRS but who may not have received a response, given the agency's mail backlog.
The notices convey varying levels of urgency, with the CP504 stating that if a taxpayer fails to pay balance due immediately, the IRS will seek to levy the taxpayer's state income tax refund.
"These automatic follow-up notices will be temporarily stopped until the backlog of mail is reduced," the agency said in its announcement. "The IRS will continue to assess the mail inventory to determine the appropriate time to resume the follow-up notices."
The IRS will credit payments sent to the agency according to when it received them as opposed to when they were actually processed, according to the announcement. The agency will also waive penalties for bad checks received between March 1 and July 15, it said.
Earlier this week, House Ways and Means Committee Chairman Richard Neal, D-Mass., asked the IRS to stop sending such notices until the agency has a better handle on its mail backlog. After the agency's announcement Friday, Neal called the move "a huge win and relief for taxpayers."
"The last thing Americans need in the middle of this pandemic is an unnecessary scare from the IRS regarding tax bills that have already been paid but are stuck in a backlog," Neal said in a statement.
Neal suggested that the IRS might also consider setting up an online portal for taxpayers to notify the agency that they have mailed payments since the beginning of March. He added that it could help the agency avoid sending incorrect notices to taxpayers who have already sent payments.
Many taxpayers mailed in their payments months ago, and it's the agency's duty to make sure they don't get charged any penalties or interest for delays that aren't their fault, Neal said.
Mail piled up as a result of IRS office closures amid the pandemic, affecting about 12.3 million pieces of correspondence, IRS Commissioner Chuck Rettig told the Senate Finance Committee in June.
The IRS has started mailing backlogged letters and notices to taxpayers, and many notices were sent with past-due payment or response dates, according to its website. The agency generally won't generate a new notice but will include an insert providing a new payment or response date, according to its website.
Separately, some employers may have received errant penalty notices from the IRS after trying to reduce their tax deposits in anticipation of using various credits, the agency said in an unrelated announcement. The IRS is working to address such errors, it said.
The IRS did not comment when asked how long the suspension would last.
--Additional reporting by David Van den Berg and Dylan Moroses. Editing by Vincent Sherry.
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