Client received CP22A Notice stating, We changed your 2020 form 1040 based on the tentative carryback application or claim you filed

[catherine3]

My client deferred 1/2 of SE tax in 2020 under the CARES act. The amount was $1,068. He paid half of that by 12/31/2022 pursuant to the payment schedule. When I filed his taxes for 2021, I did not opt out of the loss carryback (lesson learned) and now he has received this notice from the IRS stating that he owes $534 and interest. Is this the money that he would have owed by 12/31/2022? Are they charging interest because the loss carryback made him ineligible to defer his SE tax? I got him to fill out a POA and I have been trying to call the practitioners line every day and I cannot get through.

[catherine3]

He made the $534 payment by 12/31/2021.

[qbteachmt]

You have a bit of a mix of things in the question. Here's all that really applies:

You deferred an amount owed for the period beginning on March 27, 2020 and ending December 31, 2020. That would be done with the tax return for 2020, being prepared in 2021.

Half was due by end of 2021. Half was due by end of 2022. Nothing here and not anything more, relates to Income taxes. Now it's just deferral payments.

If there was a refund coming for the 2020 income tax return, there would be no deferral of the SS tax owed, because all of it can be considered "already paid in" by the fact that the income tax projection prepaid by estimates and/or withholding exceeded what was owed. That means it is already paid up to the point of what is owed, at least. That's the point of withholding and estimates.

I don't know how loss carryback relates to deferred SS.

"he has received this notice from the IRS stating that he owes $534 and interest. Is this the money that he would have owed by 12/31/2022?"

Questions 20 and beyond:

https://www.irs.gov/newsroom/deferral-of-employment-tax-deposits-and-payments-through-december-31-20...

Yes, they send out Bills. They told us they would do that. No, there should be no interest. Have you confirmed the payment was made timely?

[catherine3]

The notice he received is charging interest and the $534 payment. The interest that is being charged is for the period of 12/31/2021 to 4/25/2022. I have not confirmed that the payment was made timely. Honestly, I do not know if he even made the payment. He seems unsure. I told him to pay the $534 and the interest due. I am trying to solve a problem and unfortunately, I do not have all of the facts. I still cannot get through on the practitioner priority line to verify anything. 

[qbteachmt · Accepted solution]

"for the period of 12/31/2021 to 4/25/2022"

Then I would guess they either didn't find it in the mail, yet, or e-payment didn't happen. If you can prove it got paid timely, then the interest would go away. There was no penalty or interest for deferring. But there would be for noncompliance.