Automated IRS tax letter could be error: What to know if you got CP14 notice by mistake

No one ever wants to hear from the IRS. But they absolutely don't want to open the mail and see a detailed bill for federal income taxes that they paid already.

Many know they sent the money by the tax deadline. But they're looking at a bill that spells out "What you owe" for taxes, penalties and interest. There's even a warning that says if you don't pay by the due date the penalties could add up.

Millions of letters — what the IRS calls its CP14 Notice — are being sent by the Internal Revenue Service.

The notices are automated and some are being sent in error in light of the IRS backlog.

Many times, taxpayers do indeed owe money when they receive a CP14 Notice because somehow they underpaid the federal government. Maybe back taxes are owed or there's another more complicated issue, such as unpaid payroll taxes for a side business that has employees.

Don't toss this notice. Pay attention and see how your own situation adds up.

Many of these notices begin to arrive in June or July. But these kind of notices can show up year round. The CP14 notice typically requests that a payment be made within 21 days. If the taxpayer does not pay the amount due within 60 days, the IRS can proceed with collection activity.

Some taxpayers who already paid their bills are complaining that now the IRS sent a notice demanding payment, a CP14 Notice. Some of these were sent in error in 2022. You'll need to review your own situation. File Photo: March 2013.
Some taxpayers who already paid their bills are complaining that now the IRS sent a notice demanding payment, a CP14 Notice. Some of these were sent in error in 2022. You'll need to review your own situation. File Photo: March 2013.

Whenever you file a federal income tax return that has a balance due of $5 or more — and a math error isn't the reason — you're going to have the IRS send you an automated reminder.

Tax experts say that the IRS backlog, though, has triggered some errors along the way.

Last year, we reported that taxpayers received erroneous notices and confusing letters in the summer of 2021 from the IRS. Much of that confusion, though, involved a super late change in the tax rules relating to how unemployment benefits would be taxed. These early filers would be owed a refund once the IRS adjusted for this late tax change, as planned, so they didn't owe money in the end.

This year, Mark Steber, chief tax officer at Jackson Hewitt Tax Service, said he's not heard of any widespread issue involving erroneous CP14 notices or lost tax payments at the IRS, even though the IRS is dealing with a backlog of paperwork.

Melanie Lauridsen, director for Tax Practice & Ethics with the American Institute of CPAs, agreed that erroneous letters appear to be limited this year.

But she noted that the group has advocated for pausing a variety of automated notices in 2022 simply because the IRS is struggling with a mountainous backlog of paper returns and correspondence.

But guess what? When the IRS sends out one notice, it can trigger another round of correspondence — adding to the paper backlog.

More: Tax refunds delayed by 6 months or more for some paper filers: Here's why

More: Detroit tax preparer's 'false return scheme' offers insight for taxpayers

IRS spokesperson Luis Garcia noted that IRS stated online on June 15: "Aside from the first billing notice after a tax return is processed, we have paused the issuance of most balance due notices. Note however that revenue officers are operating with their normal authorities and may issue notices on the cases they are working."

The IRS blamed issues related to the pandemic and staffing limitations for needing in early 2022 to deal with a larger than usual inventory of paper tax returns and correspondence filed during 2021.

What should you do if you've received one of these bills by mistake?

Naturally, the first step you want to take is make sure the bill did get paid. Do you have proof that shows the money was withdrawn from your bank account to cover the tax bill? Did the taxes get paid?

Get your documentation in order. Talk with your tax professional. Make sure you have proof to show that the tax bill was paid.

Should you send a letter to document that you're current on the bill? Probably not, Lauridsen said.

But you do want to keep the letter on file, as well as the documentation.

“If you were to respond to paper mail, it just adds to the backlog. It doesn’t help the system. They’re not asking people to send more mail in," Lauridsen said.

“If you submit a letter, it will go back into that pile of the backlog.”

If you do respond by mail, do so by certified mail so you have proof that you did respond.

Typically, you should not panic after receiving this first notice, as the IRS is working through returns. A second notice down the road, though, could be more troubling.

The IRS has a method to apply online for a payment plan, including installment agreements if you owe money. You'd want to pay the amount owed by the due date on the notice or make a payment plan if you can't pay the full amount owe. Or, taxpayers need to contact the IRS if they disagree.

If you disagree with the notice, the National Taxpayer Advocate recommends calling the IRS at the toll-free number on the top right corner of your notice.

Some advise that it's easier to try to get through if you call at 8 a.m. eastern on the dot at the start of the day.

When you make that call, you need your paperwork, such as canceled checks and an amended return, ready at hand.

Lauridsen warned that making a call to the IRS isn't easy, given that the phone lines often have long waits.

Steber said taxpayers should leave open the possibility that sometimes things didn't go as expected and you might owe money — so be sure to take extra time to document whether a bill was paid before you just make a call.

Detroit IRS office makes a move

In other tax news, Michigan taxpayers who plan to visit an IRS office need to know that the Taxpayer Assistance Center has moved out of its offices on located at 500 Woodward Ave.

The IRS Taxpayer Assistance Center in Detroit is now open at the Patrick V. McNamara Federal Office Building, 477 Michigan Ave.

The new TAC location is less than one mile from its former location. The IRS notes that metered street parking, an off-street lot and the Rosa Parks Transit Center are next the new location.

All of the assistance centers operate by appointment. To schedule an appointment at the Detroit center, call 844-545-5640. The office is open Monday through Friday from 8:30 a.m. and 4:30 p.m.

Contact Susan Tompor via stompor@freepress.com. Follow her on Twitter @tompor. To subscribe, please go to freep.com/specialoffer. Read more on business and sign up for our business newsletter.

This article originally appeared on Detroit Free Press: IRS CP14 notice wanting tax payment could be mistake if already paid

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