IRS Sending Erroneous Notices With Erroneous Content

Today is February 4, 2021. But the IRS computer has some other ideas about the date.

The IRS sent many CP21C notices telling individuals that their Economic Impact (Stimulus) payments were offset to your 2007 tax account. Yikes! From the National Taxpayer Advocate:

The IRS’s more than 109,000 CP21C letters informed the recipient, “We applied a credit to your 2007 [that is not a typographical error!] tax account due to new legislation. We used (offset) all or part of your economic stimulus payment to pay your federal tax as the law allows … As a result, you don’t owe us any money, nor are you due a refund.” Unsurprisingly, the letter directs the taxpayer to a general phone number to resolve this issue. Equally unsurprisingly, taxpayers will face more frustration because the official level of service so far in 2021 is 14 percent on the Accounts Management telephone lines, down from 61 percent for the same period last year, and employees have answered only nine percent of taxpayer calls. The CP21C letter may very well drive the more than 109,000 recipients to the phone lines on the cusp of filing season when taxpayers may already be struggling with filing and RRC questions. The letter and taxpayers’ phone experience may both escalate taxpayer frustration.

The only quibble I have with this is “The letter and taxpayers’ phone experience may both escalate taxpayer frustration.” Calling the IRS today is an exercise in futility for the most part. When I do get through–and I did three times yesterday!–I find the IRS telephone agents very professional and willing to assist me. But the 14% number mentioned above seems about right for the general lines (it’s probably 25% for the tax professional numbers–better, but not great), and that’s a huge issue.

Getting back to the notice, these notices were basically completely erroneous. What the IRS meant to write was:

Because we don’t show a filed 2019 tax return nor a 2018 return, we cannot issue you the Economic Impact (Stimulus) payment. You can still get the payment by taking a tax credit on your 2020 tax return.

The IRS did note this on their website but how many of these taxpayers will look on this website and get down to the bottom of the General Information questions and click on the link to read the information? My guess is less than 1% of the 109,000 who received the erroneous notice. Indeed, this should be at the top of the webpage so that those impacted by this will see it.

In any case, just another “fun” fact for the 2021 Tax Season.


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