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As the Backlog of Tax Returns Grows, the IRS Has Halted Certain Automated Collection Notifications

Automatic collection warnings will no longer be sent to taxpayers who owe money and haven’t filed their tax returns, the IRS announced late Wednesday under pressure from legislators. Millions of tax returns from the 2020 filing season remain unprocessed, thus many letters have already been delivered, leading to confusion for both taxpayers and tax preparers.

Last week, National Taxpayer Advocate Erin Collins testified before Congress that the Internal Revenue Service will face “extraordinarily high” delays processing tax returns for the second year in a row due to the ongoing government shutdown.

As of late December, the IRS had six million individual tax returns, 2.3 million modified tax filings, and another two million quarterly tax returns from businesses on its 2020 backlog. Only 11% of people calling the IRS in 2021 will be able to speak with an agent, according to her. For the sake of processing 2021 tax returns as quickly as possible, the IRS said last week that it will be reassigning 1,200 personnel to concentrate on the backlog.

Commissioner Chuck Rettig, in an email to workers last week, stated that it was “all hands on deck” so that consumers could be helped swiftly and so that employees could be relieved of the burden of dealing with “unprecedented” amounts of inventory to be worked. As the IRS continues to evaluate the inventory of past year returns, it will decide the proper timing for the letters to be sent again.

This letter may still be received by some individuals or tax preparers in the coming weeks, according to IRS officials, who note that in most cases there is no need for any further action because the IRS is still processing tax returns. As long as the notification seems to be accurate, taxpayers are urged to follow through and settle any outstanding balances, it stated.

Senator Bob Menendez (D-New Jersey), a member of a bipartisan coalition of nearly 200 politicians, requested that federal authorities suspend automated collection notifications until the April 18, 2021, filing deadline for tax returns.