The coronavirus pandemic is having a major effect on the Internal Revenue Service (IRS). As the agency works through tax returns, it confirmed on Thursday, Aug. 13, that it is experiencing a check-processing backlog, largely due to its limited staff, a result of new operations amid the pandemic.
"Taxpayers who mail tax returns and other correspondence to the IRS during this period should expect to wait longer than usual for a response," the agency wrote in the notice. "While the IRS is receiving mail, our mail processing functions remain scaled back to comply with social distancing recommendations. The IRS's ability to correspond with taxpayers about a variety of issues including requests for information needed to process a tax return remains limited. As the phased-in resumption of operations have resumed, IRS is now working through its correspondence backlog."
The IRS noted that the correspondence backlog is mostly affecting checks that taxpayers have mailed to the IRS (either with or without a tax return). The agency explained that such checks will be posted as of the date they received the check, rather than on the date the Service processes the check. As a result, the IRS is recommending that taxpayers whose check has not yet been cashed to not cancel the check in an effort to penalties and interest and ensure that funds are available. The IRS noted that due to this backlog, it is providing relief from bad check penalties for dishonored checks that it received between March 1 and July 15, 2020.
In its update, the IRS said that it has begun mailing backlogged letters and notices as it returns to normal operations, though some of these notices were mailed with "past due payment or response dates" due to the backlog. The IRS is including as an insert with the notice or letter a Notice 1052, Important! You Have More Time to Make Your Payment, which will provide a new, updated pay or response date. The IRS advises that recipients should take note of the last page of the insert to determine if there is a new due date or disregard the notices if steps have already been taken to resolve the issue.
The backlog comes as the agency also works to correct a number of issues encountered as it distributed the first round of stimulus check payments in mid-April. Distributed to more than 150 million Americans, the rapid process resulted in some families not receiving the correct amount or not receiving a check at all. The Taxpayer Advocate Service is aiding in this process.