Millions of Americans to Receive IRS ‘Collection Notices’ Next Week

The IRS has announced that it will begin sending letters to millions of Americans regarding unpaid tax bills starting next week, which marks the end of a practice that was suspended several years ago. The federal tax agency revealed in a recent news release that automated letters and “collection notices” will commence in January, although they did not specify a specific timetable for the process.

The upcoming letters will be sent to people with tax debts before the tax year 2022, as well as tax-exempt organizations, businesses, and trusts and estates with tax debts before 2023. According to the release, these notices were previously put on hold due to the pandemic and the IRS’s high inventory, but they will gradually resume during the next several months. The pause in letters meant that some taxpayers with long-standing tax debt have not received a formal letter or notice from the IRS in over a year.

The IRS will be waiving failure-to-pay penalties for certain taxpayers who were impacted during the tax years 2020 and 2021, estimating that approximately 5 million tax returns are eligible for the penalty relief. Generally, the CP14 notice is the first one the agency sends out for an unpaid tax balance, which is usually followed by three to four reminder letters that are sent out every five weeks.

The IRS is encouraging taxpayers to carefully read any letter or notice they receive before they call the agency. It is also stressing the importance of addressing tax liabilities and making arrangements to settle the debt. The agency will also issue a special reminder letter to taxpayers with long-standing unresolved tax issues, before sending the next notice, which will inform them of a more serious step in the tax collection process.

Multiple tax specialists have warned that Americans who receive these letters could face significant penalties, including funds being taken out of their bank accounts by the federal agency. The IRS could potentially impose levies on income and bank accounts, as well as seize property, for those who do not pay their outstanding balances.

According to a report issued by the IRS last year, more than 9 million Americans owed some $120 billion in back taxes, penalties, and interest as of September 2022. Tax debt often accumulates due to various challenging life situations such as health issues, divorce, and gambling problems. The agency is urging taxpayers with outstanding balances to start thinking about how they are going to pay their tax debt and to not ignore the problem, as doing so will not stop the notices from coming.

It is crucial for individuals receiving these notices to address the tax issue promptly to avoid further complications and to work towards resolving their tax liabilities in a timely manner. Ignoring the problem will not make it go away, and the resulting consequences could be severe. The IRS is emphasizing the importance of addressing the issue head-on and taking necessary steps to comply with the agency’s requirements.


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