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How to Handle an Unpaid Notice From the IRS

Published September 9, 2020

4 minute read

Devon Taylor

By Devon Taylor

It’s been a strange year. That goes for everything, really, but it’s especially true of your taxes.

Between layoffs, furloughs, stimulus checks, unemployment benefits, and delayed tax deadlines, it can be hard to keep track of everything. Couple that with reduced staff at the IRS due to the pandemic, and the situation is frankly a bit of a mess. In fact, a recent CNBC report claimed that the IRS had roughly 12 million pieces of unopened mail in their backlog.

As a result, some of you have started to receive scary-looking notices about unpaid taxes. We know that seeing a  government notice with late penalties and interest charges is stressful, but don’t panic yet. There’s a good chance it’s a mistake. Unless you actually didn’t file your taxes on time or pay any outstanding taxes owed. If that sounds like you, this article will not save you.

However, if you already mailed the IRS your payment and still received an unpaid notice, just stay calm. There’s a good chance that they just haven’t gotten around to opening your mail yet. Instead, the automated billing system sent you a notice that you don’t really deserve.

What Should You Do About It?

First, some good news — the problem should be stopping. The government has already asked the IRS to temporarily stop sending these automatic notices.

“The IRS should not resume sending notices to taxpayers until the backlog has been reduced to pre-pandemic levels and taxpayer accounts have been updated,” said Richard Neal, the House Ways and Means Committee Chairman.

If you previously made a payment by mail and still received an unpaid notice, things are probably fine. However, you should still take a couple of steps to make sure you’re good to go. First, check your own records to see how much you paid. Then compare that number to the notice you received. If those numbers match, you’re likely okay. The IRS will eventually get to your mailed payment.

Here’s another tip, if you sent your payment via certified mail (which is always a good idea when mailing in tax payments). You can check to see exactly when (or if) the IRS received your payment. As long as the certified mail showed up to the IRS by July 15, you won’t owe any late penalties — regardless of what the unpaid notice might say.

Expired Payments?

Now some bad news. Many popular types of tax bill payments, like cashier checks or money orders, have expiration dates. If your money order is sitting at the bottom of a pile of unopened mail, the IRS might not be able to process it when they do eventually dig it out. That’s a problem.

Don’t get too proactive. The IRS says cancelling the previous money order or check and sending a new one is a bad idea. The IRS will probably try to process your original payment, and then charge you a fee when it fails. If you’re worried this might happen to you, you can try to call the IRS during normal business hours. Prepare to wait a while to speak to an actual human, but they will be able to guide you in what to do next.

Make It Easy On Yourself

If you’re stuck in this predicament in 2020, you’re going to have to just ride it out. It’s a crazy year for everyone, including the regular people who work for the IRS and are trying to process everyone’s returns. But let’s be honest — mailing the IRS a check is an outdated method for paying your taxes.

You don’t need an expensive or advanced technological set-up to both file your taxes and send payments online. Most financial institutions make paying the IRS as easy as paying your utility bills. You can also wire in your payment, avoiding having to wait weeks (or months) for your check to clear.

The Bottom Line

Taxes can be confusing and stressful. Don’t let an unpaid notice derail your life. First, make sure it’s legit. Then double-check that you actually sent payment by the deadline. It should go without saying, but if you didn’t actually pay your outstanding taxes yet, you’re going to have to do that. If you’re struggling financially due to the pandemic, it’s possible the IRS will work out an extension for you. They definitely won’t just forgive the debt, though.

When you file your 2020 taxes next Spring, make sure you send any payments electronically. It will save you a huge amount of time and frustration in the event of an unforeseen IRS backlog.

Woman Shocked by IRS Letter

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Devon Taylor

Contributor

Devon is an experienced writer and a father of three young children. He's simultaneously trying to build college funds and plan for an eventual retirement. He's been in online publishing since 2013 and has a degree from the University of Guelph. In his free time, he loves fanatically following the Blue Jays and Toronto FC, camping with his family, and playing video games.

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