What Happens if the IRS Says You Owe Them Money?
Greg Lavelle • September 13, 2020
This year hasn’t been easy on us, and the IRS is having its share of troubles too. Due to shutdowns this spring, the mail has been piling up in IRS mailrooms. This summer, 12 million envelopes had yet to be opened. Unfortunately, that might mean that the check or money order you sent to them has yet to be discovered.
Money orders can be particularly problematic. Since they must be cashed within 60 days, many are rejected once the IRS does finally deposit them. Then the taxpayer receives a notice, submits a new check or money order, and the process begins again.
In other cases, the submitted payments simply have not been opened yet.
The end result is that taxpayers are now receiving automated notices of missing or late payments, but you shouldn’t panic. The IRS is aware of this problem, and have policies in place to protect you, such as:
- If your check was dated between March 1 and July 15, you will not owe bad check or late penalties
- Those who submitted their tax returns and payments via certified mail with a tracking number can present that number to the IRS, to prove timely filing and payment
- If your payment was deposited, you can present a copy of the certified check to the IRS to prove payment
If you do receive a notice of unpaid taxes, contact your tax professional immediately. In many cases they might be able to clear up the mess for you.
If you filed taxes yourself, canceling the check can trigger a bad check penalty from the IRS when they do deposit it. Instead, you can call the IRS to let them know you did file your taxes and send the payment. Once their backlog is cleared, you will be able to prove your timely payment and late fees should be waived.
In other words, these notices are usually nothing to worry about. If you did indeed file and pay on time, the IRS just needs more time to work out the kinks in their system. Only those who truly filed and paid late will ultimately owe a penalty.
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