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IRS Errors in Applying Some 2021 Tax Payments - CP14's arriving

Updated: Aug 3, 2022

IRS errors are in full swing again this year. This year, the IRS is having problems with it's Direct Pay system. The IRS has confirmed it's direct pay system is not accurately matching all tax payments made by many taxpayers - and particularly taxpayers filing MFJ - to taxpayer's accounts. As a result, many taxpayers that have paid their 2021 tax payment in full are receiving CP14 notices (automatically) informing the taxpayer 2021 tax payments have not been received.

This is a big deal, as the IRS CP14 letters request the balance, interest and penalties be paid within 21 days. If the IRS doesn't have record of payment 60 days after the letter was sent out, the IRS can take the account to collections. The IRS is, as referred to above, aware of the issue, and working on a resolution.

Whether or not you have already received a notice, you will want to make it a priority to locate your 2021 federal tax payment confirmation, and confirmation the funds were debited from your bank account. Keep this documentation handy. If you haven't yet received a CP14, your CP14 may be on the way.

Taxpayers Receiving CP14 Notices have Three (4) Options

#1 Write a letter to the IRS in response to the CP14 received

Include a copy of your CP14, and copy of your payment confirmation, and record of the funds being deducted from your bank account. Send your documentation by certified mail, and request return receipt.

This method is problematic, it may take some time for the IRS to get to your package, due to backlog.

# 2 Call the IRS

This method is also problematic, as it is extremely difficult for taxpayers to reach the IRS by phone, due to the volume of calls. It is estimated in 2021, 10% of taxpayer phone calls. This year, it is estimated this figure is going down.

# 3 Do nothing - and hope everything eventually works out

Ignoring an IRS notice is not recommended.

# 4 Consult a tax professional

Professionals qualified to speak with the IRS have access to a specially designated priority phone line, and should be able to reach the IRS to discuss the issue with the IRS on your behalf. Specific authorization must be provided to allow the tax professional to speak with the IRS on your behalf.

If you have any questions, or need assistance, we are here to help. Reach out to get our conversation started.

Cobalt PacWest | CPAs & Tax Advisors

Palo Alto Square

3000 El Camino Real, Bldg 4

Palo Alto, CA 94306

650.930.9562 | 877.223.5678

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