The Internal Revenue Service said Friday it would restart issuing its 500 series of balance-due notices to taxpayers later this month after they were paused on May 9 due to the COVID-19 pandemic.
While the IRS continued to issue most of its notices, the 500 series was temporarily suspended because of a backlog of mail that built up at the IRS while many employees were away from agency facilities due to COVID-19. The IRS came under fire earlier this year for issuing balance due notices with the incorrect dates to taxpayers during the pandemic and agreed to stop sending the notices until it caught up with its backlog of unopened mail (see story).
Lori Daugherty is Chief Executive Officer at Ascellus where she provides analytical decision-making, strategic planning and executive leadership. As CEO with more than 30 years of experience, she is focused on developing best practices for organizational processes, performance measurement systems and building Ascellus’ infrastructure to maximize the company’s growth.
Jeff is a founding member of Informed Consulting. He has 25+ plus years of employee benefits experience working with enterprise employers, digital health companies, health plans, insurance carriers, InsureTech, HCM, and financial wellness companies.
Via Informed Consulting, Jeff served as the CRO (Seed Round, Series A, and Series B) at Nayya. He held various sales leadership positions in 12 years at Benefitfocus, a benefits administration company. At Benefitfocus, Jeff developed an ecosystem distribution market for early-stage digital health and financial wellness companies. Prior to Benefitfocus, Jeff worked for health plans and insurance carriers for 13 years.
Jeff was named by Employee Benefits Advisor as “30 Benefit Thought Leaders to Know” and “30 People to watch in Benefits 2017”. Jeff has been featured in CNBC, Inc Magazine, Forbes, Employee Benefits News, US News and World Report, SHRM Magazine, and numerous other publications.
Julia Hu is an American entrepreneur and the co-founder and CEO of Lark. Founded on the personal experience of having grown up with an undiagnosed chronic condition, Julia is passionate about bringing compassionate care to those preventing or managing chronic disease. Hu was named to Business Insider’s 30 Under 40 Changing Healthcare list and was awarded as a member of the UCSF Health Awards Hall of Fame in 2021, as well as the EY Entrepreneurial Winning Women™ North America Class of 2021. Prior to founding Lark in 2011, Julia ran global startup incubator, the Clean Tech Open, built a sustainable construction startup, and was an Entrepreneur-in-Residence at Stanford’s StartX incubator. She is on the board of the Council for Diabetes Prevention and a Singularity University faculty member. Hu received her Master’s and Bachelor’s degrees at Stanford University and half of an MBA from MIT Sloan before founding Lark.
The IRS said Friday that it has now caught up enough with its mail backlog to account for payments that are mailed on a timely basis. Some taxpayers will start seeing updated 500 series notices with current issuance and payment dates in late October or early November.
The 500 series of balance due notices includes three different types of notices that warn taxpayers about different stages of nonpayment: the CP501, the CP503 and the CP504.
The CP501 notice tells taxpayers they still have a balance due and what their options are, while the CP503 lets them know the IRS hasn’t heard from them yet and they may be subject to a tax lien if they don’t pay their taxes. The CP504 alerts taxpayers they need to pay their balances immediately or face the possibility of a levy of their state income tax refunds. The 500 series of notices are typically sent to taxpayers if they don’t respond to or pay their initial notice and demand on the CP14 letter.
Despite the resumption of the notices, the IRS is still in the process of catching up on millions of pieces of unopened mail, prompting a letter this week from Democrats on the House Ways and Means Oversight Subcommittee asking if the IRS will be ready in time for next tax season (see story). They also asked the IRS this week about why it was sending out notices revoking the tax-exempt status of over 30,000 nonprofits despite an extension it was supposed to have granted them for filing the Form 990 during the pandemic while it’s in the midst of processing the backlog of unopened correspondence. Earlier this month, IRS Commissioner Chuck Rettig told another House oversight subcommittee that the IRS was still processing 5.3 unopened million pieces of mail, including 2.5 million paper tax returns.
The IRS is encouraging taxpayers who can’t pay to consider some of the available payment options while penalties and interest continue to accrue.
The IRS noted that taxpayers who were affected by the pandemic or other circumstances may qualify for relief from penalties due to reasonable cause if they’ve made an effort to comply with the requirements of the law, but couldn’t meet their tax obligations, due to facts and circumstances beyond their control. Taxpayers should call the toll-free number listed on their notice to ask for penalty relief due to reasonable cause if they believe they qualify and have the supporting documentation to prove it. More information on reasonable cause relief can be found on a page at IRS.gov. Payment options and extra information can also be found on another page of IRS.gov.
