Disaster Relief: What the IRS giveth, the IRS taketh away. Or so it seems for disaster relief taxpayers until you get to page 4 of the collection notice.
As discussed in Part One, over one million taxpayers living in a disaster area filed their returns early with a balance due, expecting to make a timely payment by the postponed dates. Unfortunately, for taxpayers covered by a disaster declaration the IRS followed its normal collection procedures and mailed an initial collection notice and demand, Notice CP14, reflecting an incorrect due date. The notice also informed the taxpayers that interest and penalties would accrue after the due date reflected on the front page of the notice. This is wrong for taxpayers covered by disaster declarations because payment is not required prior to August 15 or October 16, depending on the disaster area when the original due dates fall within the postponement period. To remedy the incorrect date, the IRS included a short paragraph on the back of page four of the Notice CP14. However, the additional language did not solve the problem. Instead, it led to confusion and questions.
What Is the IRS Doing? What Can Affected Taxpayers Expect?
After receiving complaints from affected taxpayers, the IRS decided to send out updated notices (Notice CP14CL) to clarify that taxpayers covered by disaster declarations do not have to pay before the postponed due date, August 15, 2023, or October 16, 2023. The updated notice will reiterate that early payment or taxpayer response is not needed. Impacted taxpayers should expect to start seeing those letters in the mail shortly.
Bottom Line: Taxpayers covered by a disaster declaration who receive a Notice CP14 should read the entire document including any inserts. The subsequent mailings, CP14CL state, “Since your address of record is located in a federally declared disaster area, the IRS has automatically granted you disaster relief. This gives you an extension of time to file your tax returns as well as make your tax payment listed on the CP14 Notices. You do not need to contact us to get this extra time to pay.”
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