WHAT TO DO IF AN IRS NOTICE TELLS YOU IT HAS NOT RECEIVED YOUR 2020 RETURN

 

Many of my clients have received notices from the Internal Revenue Service stating that they have an unidentified credit for tax year 2020 and that the Service had not received their 2020 income tax return.  They all seemed to have been mailed out to the taxpayers on the same date – a bulk automated mailing by the Service perhaps late last week.

In all of these cases the client timely mailed their 2020 return, which I prepared manually, to the IRS with a check for a balance due accompanied by a 2020 Form 1040-V.  It is obvious the IRS received the tax return, since the notice acknowledges receipt of the payment.

It is clear that, as I have posted before, the IRS is totally FU-ed – a direct result of the Service’s decision to completely shut down for over 6 months in 2020 in reaction to the pandemic.    

The notice tells the taxpayer to file their 2020 return or re-submit to the IRS a copy of the 2020 return that was filed with an original signature (or signatures if a joint return) and copies of all forms, schedules and attachments, including any W-2s or 1099s, that were part of the original filing.

My initial advice to the clients who received this notice, supported by a discussion of the issue on a Facebook tax preparer group, was to do as the notice instructed and send the IRS a copy of the original return and all attachments.

However, one client told me he called the IRS about the notice and, surprisingly, was able to get through without much wait time.  The IRS employee to whom he spoke told him NOT to re-submit his 2020 Form 1040 return as the Service was developing an “internal procedure regarding the 2020 tax returns”.

I just read today in a “tweet” that (highlights are mine) -

“The IRS will halt the use of automated notices in cases where a payment has been credited to a taxpayer but no tax return has been processed in an effort to help ease confusion related to a backlog in paper filings.

‘In many situations, the tax return may be part of our current paper tax inventory and simply hasn’t been processed. Stopping these letters — which could have otherwise been sent to thousands of taxpayers — will help avoid confusion,’ the agency said in a January 26 statement.”

Clearly the 2020 tax returns of my clients ARE a part of the Service’s current paper tax inventory and simply hasn’t been processed.

So, if you received a notice from the IRS reporting an unidentified credit but no receipt of a 2020 return it appears you should do nothing.   Do not resend a copy of your 2020 return to the IRS.

This makes sense.  The IRS is already inundated with literally millions of pieces of unprocessed correspondence and millions of unprocessed 2020 returns.  Sending a second filing of a 2020 return the IRS already has will only add to this humongous backlog and exacerbate the problem.

As I have also posted before - It will take many, many, many months for the IRS to fully recover from its 2020 shutdown, if it ever does.

TTFN