Ask The California Employment Tax And Payroll Tax Attorney – Congress Is Not Happy With Irs Efforts To Deal With Its Backlog

By Robert S. Schriebman

2022

Introduction

In response to Congressional demands, the IRS has taken the initial steps to deal with literally mountains of unopened returns and other correspondence. Thirty Republican Senators signed a petition and demand for immediate IRS action. All GOP members of the Senate Finance Committee are also demanding action.

IRS Suspends Notices

The IRS has initially stopped sending out various collection notices and notices for unfiled returns, both in English and Spanish. Here is a partial list of these notices:

• CP80 – Unfiled Tax Return: credits to a taxpayer’s account for the tax period shown on the notice, but the IRS hasn’t received a tax return for that tax period.
• CP59 and CP759 Unfiled Tax Return(s) – 1^st Notice: IRS sends this notice when there is no record of a prior year return being filed.
• CP501 – Balance Due – 1^st Notice; CP 503 – Second Notice and CP504 – Final Notice and Notice of Intent to Levy

What we are not being told is that the mere suspension of these notices does not impact or stop the daily compounding of interest on unpaid tax debts. In that sense the suspension of notices has both a positive and negative impact all at the same time. Stopping notices is one thing, stopping enforced collection action is quite another. There is no method or authority for stopping the accruing of daily compounded interest. It’s statutory.

Stopping The Letters is Not Enough

The Republican members of the Senate want more from the IRS that just stopping notices. There is a backlog of over 6 million paper returns that have not been opened or processed. There is close to 2.5 million unopened paper amended returns. There are over 1 million quarterly payroll tax returns that are sitting unopened, and close to a half million paper amended quarterly returns that have not been opened. In addition to all of this, no one dares take a guess at how large is the mountain of other unopened correspondence, such as refund claims and claims for abatement.

The IRS has promised Congress to reorganize its manpower to deal with this governmental consternation. To add to this, there is a manpower shortage due to Covid and due to competition from the private sector.

The GOP Senators want the IRS to take the following specific actions:

• Stopping automated lien/levy notices for the time being;
• Holding off on the collection process for those taxpayers who filed but did not fully pay;
• Keeping the public informed about what the IRS is doing with regard to the mountains of unopened correspondence.

Conclusion

The status of all these unopened returns and documents is going to be an ongoing process and the end is nowhere in sight. I will keep you informed as they develop.

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Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 40 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD and he is not employed by the EDD or any other agency of the State of California.

Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

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