Balance Due Notices From The IRS

Also on Aug. 21st, the IRS Said it was working to identify and correct erroneous penalties it applied to some employers who reduced their payroll tax deposits to claim COVID-19 relief-related credits.

In the first announcement, three types of taxpayer follow-up notices are suspended — CP501, CP503, and CP504 — all of which the IRS typically sends after first notifying a taxpayer that they have a liability due. In its announcement, the IRS acknowledged it still has a mail backlog, which accumulated during the COVID-19–related closure of most of its operations but said it was making “significant reductions” in it.

Earlier in August, the IRS, in an update to its webpage on its operations during the pandemic, advised taxpayers who had mailed in payments by check that had not yet been cashed not to cancel the checks and to maintain an adequate bank balance to cover them. The IRS said that payments will be posted as of the date the Service received the check, rather than on the date it processes it. The Service further said that, due to the delays, it would waive bad-check penalties on dishonored checks that it had received between March 1 and July 15, 2020.