IRS Notices, Liens, and Levies

The IRS collection division is recovering from pre-pandemic lockdowns and began sending out letters from the Automated Collection System function in June.  They also restarted the income tax levy program in July. In addition, responsible officers continue to work on non-filer cases and are sending out notices and billing notices; however, their focus is primarily on egregious cases, such as high-income non-filers.

According to an IRS spokesperson “There’s still a backlog of paper, and until that’s cleared there will be people that efiled and mailed in their check, the check cleared, but they get notices saying they never paid.  That’s the downside of restarting the program. They have to do it because otherwise people will get complacent when they think there’ll be no repercussion for not paying.”

“The phone lines are still backlogged due to taxpayers not getting their refunds,” he explained. “They have to go through manual processing, mostly for returns that had additional stimulus funds. Because of time constraints, the IRS didn’t have time to fully reconfigure their computers to recalculate the additional credits due for the additional stimulus money.  

This year continues to be unique and filled with issues.  The IRS has hired over 3,200 employees to cover attrition and to increase staffing. As the IRS is attempting to reduce the backlog, the Austin and Fresno Service Centers have been tapped to help process Forms 941. As of mid-July, approximately 1.8 million forms have not yet been processed. For returns prior to 2021, 11,000 are still in inventory. These figures are for Form 941 returns — they don’t include Form 940, or Form 941X amended returns.  This problem is a large issue because many companies qualified for the Employee Retention Credit and are waiting for these returns to be processed so that they can receive their tax credit refunds. 

If you receive a notice from the IRS that you believe is incorrect, don’t have a heart attack, but don’t disregard it either.  Contact your tax professional or call us so that you can respond properly and timely.  You should also call (or have your professional call) and request collections hold on your account.  This will keep you from a surprise lien or levy and the accompanying headaches that come with them. 

Mitch Reitman is the Managing Principal of Reitman Consulting Group.  He can be reached at MReitman@Reitman.US.

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