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).
Deborah "Deb" Dioguardi is Executive Vice President and Professional Lines National Practice Leader at Jencap, where she drives the growth and strategic direction of the firm's management liability, professional liability, and cyber liability practice. A highly respected wholesale broker, industry leader, and recognized thought leader, Deb has dedicated her entire 25+ year career to Jencap, building a reputation as one of the foremost experts in professional lines insurance. Her contributions to the industry have earned national recognition, including the 2023 ACORD Women's Insurance Advancement Award and a place on Insurance Business America's 2025 Hot 100 list. Deb holds a bachelor's degree from the New York Institute of Technology and currently serves on the Board of Directors for the Insurance Brokers Association of New York (IBANY).
Kelly Grace, director, advisory – ECS – motor fuels and excise tax at Weaver, has more than 14 years of experience in professional accounting with a focus on complex fuel excise and sales and use tax matters, with experience building, testing, and implementing tax logic for Avalara, IGen, Sabrix, SAP and Right Angle. She is well-versed in planning and directing federal and state motor fuel and sales tax audits. She manages co-sourcing tax compliance projects for companies in all 50 states and researches and advises clients (refineries, fuel terminals, pipeline operators, retail stations, end users) on new and updated state and federal tax laws affecting clients' businesses. She is a CPA in Pennsylvania, a member of the Pennsylvania Institute of CPAs, the Pennsylvania Bar and the Federation of Tax Administrations, Motor Fuel Sections. She earned her bachelor of science in accounting and economics from the University of Delaware and her Juris Doctorate from the Temple University Beasley School of Law.
Bob Donnellan is a motor fuel and excise tax expert at IGEN with more than 40 years of industry experience, specializing in compliance, reporting, audit defense and tax system strategy. Over his career, he has advised companies across the fuel supply chain on complex state and federal motor fuel tax issues and helped shape industry best practices through leadership in the Federation of Tax Administrators. He has trained over 1,000 tax professionals and state auditors, served as an expert witness, and played a role in developing innovative tax reporting systems and resources that are still used today. Today, he continues to share his deep industry knowledge as motor fuel tax subject matter expert at IGEN.
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.
