Submitted by Sestini & Co
| on Wed, 02/09/2022 - 11:43 | In Tax planning and pensions
It’s been reported that the IRS has a backlog of more than 6 million unprocessed tax returns, even though the return payments associated with these tax returns have been processed. As a result, many taxpayers have received CP-80 (CP80) notices informing them that a credit has been made to their account but a tax return from 2020 is still due. What’s happening is that most of the time the IRS has received the tax return but just hasn’t processed it.
This has resulted in a lot of confusion as the CP-80 notice stipulates that a tax return should be filed and that failure to do so will mean that person will not receive their credits whereas the IRS is saying in many news releases that they shouldn’t file a return. With a strict time limit on claiming a refund this is concerning for many people.
In addition to the CP-80 notices, some taxpayers have received failure to return notices resulting in penalties and liens, with some payments to the IRS being returned to the taxpayer.
So what should you do if this affects you?
In most cases it’s likely a mistake caused by the backlog of unprocessed returns and you won’t need to refile. However, it may be advisable to contact the IRS yourself to clarify the situation (or Sestini & Co if you are a client).
According to some sources, the IRS has taken the initiative to suspend notices in cases where taxpayers have been credited with payments but no record of them having filed a tax return is showing up. It may simply be that the tax return is part of its current paper tax inventory and hasn’t yet been processed. So whilst the letter says to refile your return, the IRS website now says you shouldn’t resubmit your 2020 tax return.
It’s also worthwhile double-checking the credit details are correct and that you have proof of having filed a tax return along with proof of payment. People can also check their online accounts to confirm that the IRS received your payment or return by downloading free IRS transcripts.
How we can help
If you’re looking for some advice in relation to your US tax or are grappling with other financial issues during this time, why not talk to us. Here at Sestini & Co we dedicate considerable time and expertise to keeping up with changing case law and ensuring we know the tax rules.
If you need help with any tax-related issues and would like to speak to us, give us a call on 01761 241 861 or email us today.
We will be pleased to discuss by phone or to invite you to an online consultation.