IRS Notices
On August 21st, the IRS issued two press releases in regards to late payment notices it had been issuing.
The IRS is behind in processing mail and, as a result, the payments clients have mailed in may still not be deposited or processed. As a result, the IRS was sending out letters with balance due notification for the amount that the client had already paid via mail. The IRS has admitted this is an issue and is asking clients not to stop payment on checks or reissue new ones.
Please remember that you may submit your tax return and estimated tax payments electronically rather than mailing in checks. This could prevent the receipt of an erroneous notice due to the processing delay at the IRS. Please visit the IRS website for more information regarding payment options at www.IRS.gov and select “Make a Payment”.
Please continue to forward any notices from the IRS or other jurisdictions to your SVA advisor to determine if any additional action is needed.
IRS Refund Checks for Interest
In regards to 2019 tax returns, the COVID-19-related July 15,2020 due date is considered a disaster-related postponement of the filing deadline. Where a disaster-related postponement exists, the IRS is required, by law, to pay interest on refunds, calculated from the original April 15th filing deadline to the postponed deadline, July 15, 2020 in this instance.
The IRS will send interest payments to taxpayers who timely filed their 2019 federal income tax returns by the extended deadline of July 15th and either received a refund in the past three months or are still waiting for a refund. No interest will be added to any refund issued before the original April 15th deadline.
The size of interest payment depends on the size of your tax refund, and according to the IRS, the average interest payment is about $18.
Taxpayers who received their tax refund by direct deposit will have their interest payment paid the same way into the same account. The remainder will receive a paper check, which will have a notation saying "INT Amount" on it, identifying it as the interest payment.
By law, the interest payments are taxable and those who receive them must report them on the 2020 federal income tax return they file next year, no matter how small the payment amount. The IRS will send a Form 1099-INT to anyone who receives interest totaling at least $10 in January 2021.
