IRS not cashing checks for owed amounts

[Drphibes]

I have now had 4 Trust returns with tax due where the checks were written and sent in months ago and have not been cashed.  Have recommended cancelling and sending in new checks 2 of them over 6 weeks ago but those have yet to be cashed.  Anyone else seeing this?

[abctax55 · Accepted solution]

The IRS has been stockpiling mail, as they've also been under COVID-19 restrictions & no one's been there to open the envelopes.

*I* would be worried about stopping payment, then the IRS does (eventually...) try to cash the checks and payment is declined.  IF it gets to six months & a stale dated issue.... Oy, the paperwork that'll be flying.

[DAS13]

Yes, I have the same problem with one trust, and my partner in the firm has a similar case. You are not alone. This seems to be an issue only with the IRS service center that processes trust tax returns.

And to add insult to injury in my case, the client just received a notice from the IRS, saying that they hadn't paid the amount due with the trust return when filed! I advised my client to simply wait - Hopefully the IRS employees will find these tax payment checks when they get back to work in their offices.

[Just-Lisa-Now-]

Ive got a client with a CP2000 response that was sent in with a check back in March, still hasnt cleared either...havent gotten anymore notices though.

[BobKamman]

Probably Kansas City Service Center, which I don't think has reopened.  Ogden opened partially a few weeks ago, and is making progress on 1040 returns -- so probably 1041s, also.   I would not have stopped payment on checks.  It's not that difficult to keep up with the news on what is happening at IRS, at the federal government, and around the country and world.  As mentioned, now IRS is going to cash both checks, charge a penalty for the rejected one, and take time away from helping the rest of us to sort out the mess.  

[Drphibes]

Actually it is the Ogden facility which I just saw is just partially opening up.  In today's mail I just got notices disallowing my clients daughter as a dependent (she is 16 and absolutely a dependent) dated April 6th with a due date of payment April 27th or respond by that date. The notices are from Austin TX.

[sjrcpa]

Were there inserts with that letter saying the dates are messed up b/c the mail sat for months?

[Drphibes]

Nope,

Was on the Practioner Hotline an hr ago (back up and running, that goodness) about another problem and the agent said the section of the IRS that prints notices just got going again and is just spitting out backlog with no regard for what the due dates say.  According to the agent, notices during this time have a blanket 7/31/20 respond date.

[Jeff Stieglitz]

Inspector General's report at https://www.treasury.gov/tigta/auditreports/2020reports/202046041fr.pdf

says on page 13:  "As of May 20, 2020, the IRS estimates that it has received 10.4 million pieces of mail while the Tax Processing Centers were closed. This includes mail stored within its various Tax Processing Centers and in 20 semi-trailers and six storage containers housed outside these Centers.  The unopened mail includes tax returns, taxpayer correspondence, payments, and mail returned as undeliverable. Each Tax Processing Center has a mail operation that opens, sorts, counts, and routes all incoming mail and packages to their appropriate destinations. These actions were all halted when the Tax Processing Centers were closed. Furthermore, all paper tax return processing was halted. "

[qbteachmt]

https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue

"Notice Mailings - Some Due Dates Extended to Help Taxpayers: The IRS began mailing backlogged letters and notices to taxpayers in the agency’s steps to return to normal operations. Because of the COVID-19 shutdown, many of the notices were mailed with past due payment or response dates. To save time and costs, the IRS in most cases will not generate a new notice. Instead, the IRS will include Notice 1052, Important! You Have More Time to Make Your Payment, as an insert that will provide a new, updated pay or response date. Please read the insert carefully. It explains why the notice was delayed and, more importantly, provides a new date in which to pay or respond. Below are key points recipients should note when the notice is received. They should:

• Review the last page of the insert to determine if there is a new due date.
• Disregard the notices if steps have already been taken to resolve the issue.
• Visit IRS.gov/coronavirus for more information.
• Contact the IRS using the number on the notice if you have additional questions. Keep in mind that phone lines remain extremely busy as the IRS resumes operations.

Extended Due Dates: The expired payment due dates printed on the notices were extended, as described in the insert. The new payment due date was either July 10, 2020, or July 15, 2020, depending upon the type of tax return and original due date.

More than 20 million notices were mailed since early June with either the appropriate insert or with current dates. Due to an error, affecting a fraction of these notices, about 11,000 notices were sent without the insert. Upon discovery, we immediately began reaching out to these taxpayers providing them with the appropriate information regarding the corrected due dates for a response to the notice and have updated our systems accordingly. All notices that were previously held as a result of the temporary closure of our facilities, have been mailed. As such, this should not be a reoccurring issue."

[99aggiegrad]

I'm guessing the IRS posted somewhere the Ogden Service Center is months' behind and not to reissue checks?  Please do share; I couldn't find anything. Silly me, I assumed after almost 2 months my checks may have gotten lost and reissued them.

I certainly hope my (over)diligence to pay the IRS doesn't cause you any problems. 

[qbteachmt]

"I certainly hope my (over)diligence to pay the IRS doesn't cause you any problems"

Who is the "you" for that concern? The tax payer does not have to keep sending checks; the IRS will cash whatever they have, and if that hits a Stop Payment, that just means everyone has to chase their tails to resolve the issue that is clearly already delayed. The goal is to not make things worse, not keep duplicating and triplicating efforts, not to overreact, and just to keep having some patience.

[Jeff Stieglitz]

There's a bit more information here, but not much.   https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue

Seems like the IRS called back the people that handle printing, but there is still a lot of mail to go through per the inspector's report in the last posting.  I've seen a late payment notice received this week via post office mail regarding for a check that was sent in early July, so I'm not about to recommend a stop payment.  Maybe just prior to the due date they make payment again electronically and then sort it out later.

[Dirk]

Yes , I have same problem , with 1041  Trust payment going to Kansas City , MO.

[qbteachmt]

This is why you should sign up for the e-newsletters. This came today:

Pending check payments and payment notices

---

If your client mailed a check with or without a tax return, it may still be unopened in the backlog of mail the IRS is processing due to COVID-19. Any payments will be posted as the date IRS received them rather than the date the agency processed them. To avoid penalties and interest, taxpayers should not cancel their checks and should ensure funds continue to be available so the IRS can process them. To provide fair and equitable treatment, the IRS is providing relief from bad check penalties for dishonored checks the agency received between March 1 and July 15 due to delays in IRS processing. However, interest and penalties may still apply.

Due to high call volumes, the IRS suggests waiting to contact the agency about any unprocessed paper payments still pending. See www.irs.gov/payments for options to make payments other than by mail.

[Just-Lisa-Now-]

I hadnt read this yet, but I told my client that just got the notice of non payment for a check she sent back in July, she had tracking that shows it was received, to just hold tight, dont do anything, just wait it out!

[qbteachmt]

We have a new member here. Let's see if @Flamingo340 who self-identified as an IRS systems analyst, would like to help inform everyone as to what is going on, beyond what is already formally issued by the IRS through their updates and newsletter outlets.

[jhfla]

Does anyone have an update on this? I submitted payment for trust return back in early June, check still not cashed and now just received notice from irs that payment not received and they are tacking on penalty and interest. I contacted irs a few weeks ago that check hadn’t been cashed and the rep advised I wait until September. 

[Just-Lisa-Now-]

I have a few similar situations, I think were stuck just waiting until theyve had a chance to process all the unopened mail.

[abctax55]

rep advised I wait until September

Then my suggestion is wait until September ?

[qbteachmt]

"Does anyone have an update on this?"

@jhfla 

Uh, yes, I posted it. It came from the IRS. It came to my inbox, because, as I note, the IRS sends out updates. You get them when you are signed up for their e-newsletter. And you are one of the people that should be signed up.

Go here:

https://public.govdelivery.com/accounts/USIRS/subscriber/new?preferences=true

For a bunch of portals. You are likely going to want IRS, Payroll, SBA, DOL. You get to checkmark what you want to get for notices.

[DCC567]

We have the same issue...this is what I just found:

From IRS website: https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue

Pending Check Payments and Payment Notices: If a taxpayer mailed a check (either with or without a tax return), it may still be unopened in the backlog of mail the IRS is processing due to COVID-19. Any payments will be posted as the date we received them rather than the date the agency processed them. To avoid penalties and interest, taxpayers should not cancel their checks and should ensure funds continue to be available so the IRS can process them.

To provide fair and equitable treatment, the IRS is providing relief from bad check penalties for dishonored checks the agency received between March 1 and July 15 due to delays in this IRS processing. However, interest and penalties may still apply.

Due to high call volumes, the IRS suggests waiting to contact the agency about any unprocessed paper payments still pending. See www.irs.gov/payments for options to make payments other than by mail.

[abctax55]

@DCC567 

Which is exactly what @qbteachmt posted earlier in this thread (on Friday).

[qbteachmt]

That text came last week as part of this:

e-News for Tax Professionals Issue 2020-33

And today as part of this:

e-News for Small Business Issue 2020-14

And I bet they will keep sending it out with other e-newsletters.

That's why I keep recommending you should sign up for them  🙂

[oakman2000]

I actually got a late notice and additional fee's for non payment, even though my check was mailed the same day the return was electronically filed.  Placed a stop on original check and issued a replacement.  After reading up this, probably not a good idea.  Don't know what to do now .

[Just-Lisa-Now-]

Just have to wait and see how it works out I guess, Im sure youre not the only one!

[Drphibes]

If you can get a copy of the check you stopped and a copy of the check you replaced it with and mail in with an explanation, I believe the IRS will be generous with negating the penalties and such.  That explanation will take quite a while to process so just be patient.

[qbteachmt]

Pay attention to Dates:

"To provide fair and equitable treatment, the IRS is providing relief from bad check penalties for dishonored checks the agency received between March 1 and July 15 due to delays in this IRS processing. However, interest and penalties may still apply."

If you sent the first check "on time" and the second check "on time" then slow your roll and stop making things worse...Just Wait.

[ststfn]

Thanks to all of the posters on this.  I have 4 trust checks with different fillings sent to Kansas City service center on 7/15, none have been cashed yet.

[RoryAsumato]

I'm in the same situation.  Check mailed on 7/15/20...still not cashed.  Check was for a trust payment to Kansas City.

Some banks won't honor checks after 90 days if not cashed...though most bank allow for 180 days...anyone concerned about that??

[qbteachmt]

I'd consider the 180 limit more likely than the 90; and the IRS as payee likely means the clearinghouses will submit them and the banks will pay, anyway, after the 180 limit.

If you really are concerned, then cancel the checks and make the payment through one of the electronic/online portal methods. Just don't keep issuing more paper checks; that's not going to speed up anything.

[BobKamman]

Legally, banks are only required to honor checks for six months.  Beyond that, it is up to the bank’s discretion, which may include contacting the account holder for approval. The bank can also simply bounce the check without even trying to reach out, which means the depositor may get hit with a “deposit item returned” fee.

https://www.investopedia.com/ask/answers/082216/when-do-checks-expire.asp

[Just-Lisa-Now-]

But doesn't the IRS clear them electronically? they don't physically deposit the check, do they?

[BobKamman]

In that case, does anyone ever see the date on the check?

[BobKamman]

Did you use the 9-digit ZIP Code for 1041 returns?  I wonder if IRS used that to identify mail they wanted to set aside until all the 1040's were processed.  They have to pay 3% interest on the refund returns -- they can borrow at 0.12% what they can't collect by opening the mail.  

Did anyone else notice the "Where's My Refund" IRS website is down for maintenance this weekend also?  Among other lies, it claims "We are processing all mail in the order we received it.."  That clearly doesn't apply to 1041's with checks enclosed.  And how do they know what order it was received, anyway?  A million pieces of mail here, a million there -- eventually, it gets confusing, trying to figure out when each pile arrived.  

[RoryAsumato]

Thanks for the reply...but I'm not canceling ANYTHING!

[Just-Lisa-Now-]

My bank told me the date on a check is only for personal reference, the bank tries to catch checks that are stale dated, but id if a check goes through with a date later than that, theyre not in the wrong....they told me this when they honored a check that I had written to someone 2 years prior.

[LaurieS]

I sent in a payment via USPS Priority mail with a signature verification upon receipt required for 2019 taxes owed on a trust.  They sent me a notice saying they did not receive payment...they lost the check.  I tried calling and was on hold for 2 hours and then the call was dropped.  I stopped payment on the first check and sent a new check which was signed as received be them on August 24th 2020...it's September 16th and the check has not been cashed.  I also had to send in paperwork and proof that I sent the first payment in.  All I have is proof that I sent something and they signed for it...there's no way to prove I actually put a check in the envelope.  The IRS is trying to access a penalty for late payment so time will tell if they accept my proof and waive that penalty.  I sure would feel better if they cashed the second check!

[LaurieS]

Same thing happened to me on a trust payment...received notice that they had not received the payment.  I had to put a stop payment on the check and send another one...still not cashed.  I had to send proof that I sent payment that was signed for on time so hopefully they will waive the assessed penalty.

[RoryAsumato]

It seems like so many of us are in the same situation as you....at least you have a signature receipt...I don't even have that...I wouldn't worry too much....tho I probably wouldn't have canceled that first check....has anyone else out there had a overdue trust check cashed recently??

[BobKamman]

Smart people, those IRS managers.  Taxpayers don't want to make online payments?  We'll show them. 

[Just-Lisa-Now-]

There will always be those people that don't think making electronic payments is secure or safe
(I dont want the IRS to have my bank account number, what if they take money out whenever they want?!?)

People think all sorts of crazy crap, I've given up trying to understand the things many people believe.

[qbteachmt]

"There will always be those people that don't think making electronic payments is secure or safe"

Excluding that they love to get their Refund Deposits ASAP...

[BobKamman]

There will always be those people who think the Post Office has a 100% accuracy rate.  

(And ask me about my client who saw the FedEx driver deliver her tax returns to the house across the street and two doors down, on April 15.  Well, at least she knew to keep an eye out the window.)  

[RoryAsumato]

I don't think this has anything to do with the post office....and I don't think our checks were lost or delivered to the wrong address.  These checks are sitting in a holding area at at IRS office in the midwest somewhere....plain and simple...yes, I'm talking about you Kansas City!

[RoryAsumato]

Just a heads up everybody...my IRS trust tax payment that I remitted to Kansas City on 7/9/20 was finally cashed today (9/7/20)...almost 2 months later!!

[ststfn]

Hi all, my trust extension payments mailed on 7/15 were just cashed today.

[Jeff Stieglitz]

Thought I would jump back into this thread and let all of you, and the search engines, know that the IRS cashed my check today, for an estate/trust sent to the Ogden, Utah service Center.  The IRS did not cash my check for 90 days.    Covid delays, I guess.   I also signed the trust up for electronic payment to avoid this in the future.

[Phallen]

Hi!  Yes - my client is in the same situation.  She made payment on a trust for 2019 back in July.  In September she received a notice that the tax had not been paid and was issued another bill including interest and penalties.  Believing she had overlooked the initial payment, she mailed a replacement check.  Ultimately, the initial check was cashed by the IRS in early October and the replacement was cashed by IRS in mid-November.  So now both checks have been cashed by the IRS and my client is out the second amount at this point.

Does anyone have any ideas / suggestions on where to go from here to get the second payment refunded?

Many thanks!

[qbteachmt]

Duplicate payments for the same EIN and Tax Year would get refunded by the IRS without further intervention. I imagine they have a lot of this from the delayed mail this year.

Otherwise, you can certainly have this person call the IRS or do it for them, but I would give it until mid-Jan to see if the refund check just shows up.