In a statement issued Wednesday, the Internal Revenue Service (IRS) stated that “certain payments made for 2021 tax returns have not been accurately applied to joint taxpayer accounts.”
The IRS admitted that as a result of this error, “these taxpayers are receiving erroneous balance due notices (CP-14 notices) or notices reflecting the incorrect amount.”
Tax experts began discussing the problem on social media at the beginning of June.
It was unclear at the beginning of July whether the Internal Revenue Service would consider this a genuinely systemic problem that needed to be addressed because it appeared to be systematic, at least to tax specialists.
This was an emergency that required immediate action. An explanation of what may have been the cause of the problem, as well as information for persons affected by it, were provided in a statement made the day before.
In almost every case, the spouse designated as the second taxpayer on a jointly filed tax return was the one who made erroneously applied payments.
Furthermore, the vast majority of the time, an electronic payment system was used for the transactional processing of payments.
According to the IRS, “some other taxpayers may also be affected outside of this category.” Furthermore, “some additional taxpayers may be affected” (IRS).
According to the IRS, taxpayers who receive an incorrect notification from the Internal Revenue Service (IRS) are not compelled to respond immediately (or call the IRS).
This piece of good news will benefit both taxpayers and tax professionals. If you have received a notification but have already paid the tax in full and on time, either electronically or with a check, you are not needed to answer at this time.
When the Internal Revenue Service has more information to share with the public, it will issue an update.
Taxpayers who submitted a combined tax return and made partial payments in 2021 have the option of paying the remaining tax, enrolling into an instalment plan, or demanding further tax collection measures if required to do so.
Furthermore, the letter states that penalties and interest will be abolished after the update is applied and funds are correctly deposited into the taxpayer’s account.
This will happen as soon as the update is installed. This will occur after the statement has been addressed appropriately.
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Finally, the Internal Revenue Service (IRS) provides an explanation of the probable explanations and accepts that payments may be wrongly applied if an electronic payment was made by a spouse and submitted “before the joint return indicator is present.”
There is a chance that payments will be processed improperly in this case. It is possible that payments made by the secondary spouse of taxpayers who both e-filed and paid on the same day were not recognised by the IRS system as belonging to the jointly filed return.
This could have occurred if the payment was made before the return was “posted” (and indicated that it was a joint return and identified the primary taxpayer).
As a result, the system was unaware that the taxpayer had filed their tax return and paid their tax due on the same day.
