An official website of the U.S. Gov An official website of the U.S. GovTaxpayer receives a letter or notice from the IRS and either chooses to respond to the letter or notice by filling a missing tax return, paying their balance in full (tax plus any penalties and interest due), or pursuing a payment option
In a previous blog, Lifecycle of a Tax Return, we set out the initial stages of a return’s journey once it’s been filed, including certain detours a return may take as it goes through reviews prior to being posted on IRS systems. One of these detours is a review by the IRS’s Error Resolution System (ERS) where the return is reviewed for possible errors or omissions. This filing season ERS has experienced a significant backlog causing delays in refunds. To verify the accuracy of the Recovery Rebate Credit (RRC), Earned Income Tax Credit (EITC), Child Tax Credit (CTC) or Additional Child Tax Credit (ACTC), the ERS Unit is manually reviewing all returns where the taxpayer has claimed the RRC or used their 2019 earnings for the purpose of calculating the EITC, CTC, and ACTC.
For millions of taxpayers facing financial hardship, paying off their tax debt through an IA is often the only option. IAs allow taxpayers to pay their tax liabilities over time in manageable amounts. However, while this payment option can help taxpayers regain control over their tax situation, it comes at a cost. The IRS charges user fees to set up and maintain these agreements, creating an additional financial burden for taxpayers already struggling to pay what they owe.
These fees may seem modest, but they can discourage low-income taxpayers from entering into agreements that would allow them to manage their tax liabilities in a structured and predictable way. Instead of offering an affordable solution to manage tax debt, these fees may cause low-income taxpayers to delay or avoid making an IA with the IRS. This usually leads to penalties, interest accruals, and ultimately, more costly enforcement actions, creating a vicious cycle of debt that could have been prevented with the right support.
Are you still waiting for the IRS to issue a refund for a deceased taxpayer’s tax year 2022 or 2023 final income tax return? You are not alone. The IRS significantly delayed issuing refunds for final income tax returns filed with an attached Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer.
The IRS corrected one or more mistakes on your tax return due to a miscalculation.
This is acknowledgement of the Collection Due Process and/or offer in compromise hearing request. The first step in the appeals process, informing you about a conference, acknowledging the assigned Appeals Officer, and affording you the opportunity to state why you disagree with the collection action taken by Compliance and request a collection alternative to resolve the tax liability. It also informs you of Appeals’ responsibilities during the hearing
All too often we turn on the news and hear of yet another disaster affecting hundreds of thousands of people and businesses. These disasters can upend every aspect of an affected individual’s life, including damage or destruction to their home, business, and critical documents. To assist taxpayers, the President may declare the event a federal disaster, which allows the federal government to help affected taxpayers under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. Once this declaration has been made, the IRS will often provide these taxpayers with certain relief, most commonly by exercising its authority under IRC § 7508A to postpone certain tax deadlines, including filing and payment deadlines.
Despite all its challenges, the IRS processed 136 million individual income tax returns and issued 96 million refunds totaling $270 billion during the 2021 filing season. For those not familiar with IRS jargon, the term “filing season” is a term of art that includes income tax returns filed on or before the due date of the return, without considering returns filed after the due date or before the October 15 extension date.
