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Federal Tax

Automated Collection Notices to Phase Back In, Taxpayer Advocate Says

Tim Shaw  

Tim Shaw  

Temporarily suspended mailings of automated collection notices will resume on a staggered basis to spare IRS customer service representatives and tax practitioners from a deluge of taxpayer correspondence, though it is unclear when this process will—or should—begin.

National Taxpayer Advocate Erin Collins explained as much to the American Institute of Certified Public Accountants’ (AICPA) Tax Executive Committee in a closed-door meeting November 2 in Washington, D.C. According to Collins, the IRS “has a plan” for how it will restart the mailing of collection notices that were halted in February, which is to “spread it over a period of time.”

“When they make the decision, they’re not just going to flip the switch and 50 million notices go out on the same day,” Collins said to the AICPA committee comprised of tax professionals across several firms. “Their goal is to spread it out every three, four weeks, and to try and keep the levels down so that the phones aren’t inundated the minute the letters go out and you all aren’t inundated.”

The applicable individual and business notices and their Spanish language counterparts pertain to outstanding balances, unfiled returns and return delinquencies, intents to levy, and withholding compliance. They were paused to allow the IRS time to process the backlog of original and amended returns without causing confusion for taxpayers and their representatives.

At the time of the original announcement that the notices’ suspension, the AICPA responded that the move was a “positive first step,” but did not go far enough to provide relief to taxpayers. In its defense, the IRS claimed it could not pause more collection enforcement activity without Congress’ blessing, an argument the AICPA disagreed with.

At Wednesday’s meeting, a member asked if taxpayers would be receiving the next subsequent notice (such as a second warning after the initial letter) or if the passage of time would automatically trigger levies.

“My understanding is it’ll go in order. That is the intent,” Collins answered. She followed up, though, that some IRS agents may still wish to pursue larger amounts, but for now the marching oders are to hold off. “There may be a business decision made, whether it be tomorrow or six months from now,” Collins continued. “Maybe we treat different people differently, but at this point, everything’s just paused.”

The question then becomes: when should the notices resume? In a January 27, 2022, statement, the IRS stated its goal of returning “processing and correspondence inventories to a healthy level.” Fast forward to present day, where the backlog still lingers. According to Collins, it is a matter of defining the backlog itself.

“Is it the backlog of collection cases? Is it a backlog of returns? Is it a backlog of exams as to what notices go out?” she posited, adding that a key issue is whether a phone call will be answered, and if so, if helpful assistance wiould be provided. A deficiency in taxpayer service, Collins said, is that oftentimes representatives do not have access to relevant information in their system to provide detailed information, such as the exact status of a delayed correspondence or return.

With this in mind, Edward Karl, vice president of taxation at the AICPA, voiced concern that even if notices were staggered weeks apart, it would not ultimately matter if the process begins at a time when practitioners have their plates full, like when “people are already in the throes of second tax season,” as he described.

Collins questioned whether there is such a thing. “Although I hate to be sarcastic, do you ever not have a busy season anymore?” she responded, drawing laughter from some of the members. “I’m seeing busy seasons year-round.”

Karl nonetheless cautioned that notices should not start up again during “peak times.”

 

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