IRS Has a Backlog of Unopened Mail and is Experiencing Processing Delays

The IRS is experiencing processing delays as it works through its unopened mail backlog. Due to the COVID-19 pandemic, in March 2020 the IRS suspended or extremely limited many of its live services, including telephone assistance, processing paper tax returns, and responding to correspondence. 

At one point, due to the suspension of services, the IRS had a backlog of more than 11 million pieces of unopened mail. This unopened mail backlog consisted of tax returns, tax payments, and taxpayer correspondence. 

Around 5 Million Pieces of Unopened Mail, About Half of Which Are Tax Returns, Remain Unopened and are Stored At Various IRS Processing Centers As Of October 2, 2020.

At a recent American Bar Association Tax Section meeting, an IRS official acknowledged that the IRS is experiencing delays in processing paper returns and other mail due to limited staffing.

According to the IRS official, where a taxpayer paper-filed an extension request, and then e-filed the return before the extension request was processed, the IRS will “systemically abate” any failure-to-file penalties, once the IRS has processed the extension request. 

Similarly, the IRS official said that the IRS will "systemically abate" late-payment penalties, as long as paper checks were mailed by the extended July 15th due date, once the IRS has processed all its backlogged mail. 

The IRS official said that the IRS's mail backlog has limited correspondence exams, and the IRS has put its automated levy program on hold while it works through its backlog. 

However, the IRS official said, taxpayers should respond to all exam notices, if only to explain why they are unable to comply with requests for information contained in such notices. 

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