Almost everyone in California has an extension for filing and paying their taxes until October 16th (a result of the flooding in the state in January). The IRS certainly know about this: they issued multiple announcements on the extensions. Thus, a California taxpayer could file his or her return today and pay in October without any late payment penalties, late filing penalties, or interest (from April 15th onward). This is absolutely, positively correct.
But.
Yes, there’s a but. The wonderful IRS computer is sending out balance due notices to California clients (including one of ours). John Smith (not his real name) owes the IRS about $30,000 for his 2022 tax (the return was filed in mid-May); he’s already set up a payment on IRS Direct Pay for October 16th. Earlier this week he received a CP14 notice showing his balance due with penalties and interest. This caused him to call me, where I confirmed that he didn’t have to pay the IRS until October and that the IRS notice was erroneous, and:
- Mr. Smith previously called the normal IRS telephone line (800-829-1040), and the agent he spoke to wasn’t aware of the extension for Californians and told him that he did need to pay now or penalties or interest would be charged. He also waited on hold for over two hours before speaking with someone;
- I called the Practitioner Priority Service and discovered that (a) calls regarding these notices are heavy, (b) the IRS is apparently looking at stopping sending out the CP14 notices to Californians, and (c) yes, almost everyone in California doesn’t have to pay until October 16th.
The agent I worked with did put a freeze on notices to Mr. Smith, so his situation should be fine. (It’s possible he’ll receive another notice in early October, but given his payment will be made in mid-October that’s not a big deal.) But this is a result of not thinking things through completely. These notices should never have been sent. California’s Franchise Tax Board (California’s state tax agency) did not send Mr. Smith a notice regarding his California balance due (about $5,000). That payment, too, is scheduled to be made on October 16th. It shouldn’t have been a big deal for the IRS to correctly program its computers.
Of course, the IRS is dealing with technology that’s older than I am. Yes, the main IRS computer system dates back to 1959. Think punch cards and a computer that takes up a huge room. (An aside: Are you a COBOL programmer? If you are, the IRS wants to hire you!) Making programming changes is very difficult. The money going to the IRS to upgrade technology is really needed. (Yes, there’s no guarantee that it will be spent wisely but the IRS definitely needs to update its computer systems.)
If you are a California resident and receive a CP14 notice, let your tax professional know. At this point, it may be that a call to the IRS is necessary (unfortunately), but you really don’t have to pay until October 16th (unless you live in one of the three California counties that weren’t extended).
Tags: 2023.Tax.Season