One of the excuses the IRS put forward in conjunction with the relatively quiet announcement that it would send out a high volume of notices with bad dates involved the stuffers that it would put in each envelope. As I wrote yesterday, these stuffers explained that the taxpayer should not pay attention to the date on the letter (and in the IRS case management database) but rather rely on the stuffer for guidance on which the taxpayer must perform the statutorily mandated action related to the notice. The stuffers themselves raised some questions discussed in yesterday’s post.
Subsequent to the sending of the letters with bad dates on July 14, 2020, the IRS announced that “whoops”, it failed to put the stuffer notice into certain of the Collection Due Process (CDP) notices it sent. Of course, the CDP notice creates a very short window for the taxpayer to take action in order to preserve their rights. After failing to put the stuffer notice into these statutorily mandated letters with dates that might have been two or three months before the mailing (or longer), the IRS sought to correct that mistake by sending out a subsequent letter informing these taxpayers that they had more time. Unfortunately, this correcting letter had the wrong date for the last date to perform the statutorily mandated act. I will let the IRS letter do the talking:
To correct this issue with the CP90, CP90C and CP297 notices, a supplemental Letter 544-C was generated on August 6, 2020 and mailed on August 7, 2020, advising taxpayers that they have until September 8, 2020 to request a CDP hearing. In some cases, the Letter 544-C advised taxpayers they had until September 7, 2020. September 7 is Labor Day and pursuant to IRC section 7503 the due date for the hearing is the next business day, which is September 8. Issuance of the Letter 544-C is posted on IDRS command code ENMOD with the literal 0544CLTR for the date generated. Refer to IRM 5.19.9.3.3, FPLP Systemic Processes and Indicators, and IRM 5.19.9.2.4, SITLP Notices, for information regarding TC 971 action codes associated with SITLP and FPLP notices.
The Memorandum for Director, Campus Collection and Director, Field Collection from the Acting Director of Collection Policy detailing the snafu is dated September 3, 2020 and is linked here. The Memorandum does contain a copy of the supplement letter. It is not at all clear that the envelope containing the supplemental letter included a copy of the original backdated CDP notice. Let’s look at what these taxpayers will have received.
On July 14, 2020, the IRS mailed CDP notices to taxpayers that had queued up in its computer system for months during the period of time the IRS employees stayed home due to the pandemic. The CDP notices could have been dated as early as March. That CDP notice would have told the taxpayer they had until 30 days after the date of the notice to request a CDP hearing. So, for example, a letter dated March 30 and arriving sometime in mid-July to late July would have told the taxpayer to request a hearing by April 29. Since there was no stuffer notice in the envelope the taxpayer, who probably doesn’t subscribe to PT or the National Taxpayer Advocate’s blog or other sources of news about the millions of letters sent out with wrong dates, would possibly give up assuming it was a missed opportunity.
Then, three or four weeks later the taxpayer would receive another letter of some type stating that they had until September 7 or September 8 to file a CDP request. (The IRS sent the “new” CDP letters on August, 7 and that’s why it calculated the last date as September 7, a Monday since 30 days from August 7 would have fallen on Sunday, September 6. Unfortunately, the creator of the stuffer notices did not fully appreciate the calendar. Because September 7 was Labor day, the last day to request a CDP hearing would fall on the next working day, per IRC 7503, which would be September 8, 2020.) This could have created significant confusion among the taxpayers I represent. This is just one of the many problems created by mass mailing notices with the wrong dates. On top of this problem the IRS is out potentially collecting on these individuals because they did not request a CDP hearing by April 29. (Tomorrow’s post will talk about a postponement of collection for some that might have benefited these taxpayers.)
The pandemic put the IRS in a bad spot, but it is making things much worse for itself and others by sending out bad notices and by sending out its collectors before it finishes going through the backlog of mail. It would be nice to see them push the reset button and figure out how to protect taxpayer rights during a pandemic. By failing to include the stuffer in all of the notices and by failing to calculate the proper date on the notices the IRS compounded the mistake created by its decision to send out notices with bad dates.
The confusion surrounding the dates on the notices and the dates on the stuffers may provide a basis for requesting a CDP hearing beyond the date on the notices. In partial recognition of the confusion, a September 3, 2020 memo by SBSE stated that all CDP requests filed on or Before September 8, 2020 where the IRS issued letters CP90, CP 90C, or CP297 dated in the period April 3, 2020 to July 13, 2020 would be deemed timely. The SBSE memo shows that the IRS has the ability, without even invoking IRC 7508A, to extend the time for a taxpayer to receive a CDP hearing. The IRS should be generous in its determination of CDP requests and err on the side of accepting such requests during this period rather than reverting to its practice of denying such requests if a day late. Similarly, taxpayers should push back if denied a CDP hearing given the confusion that has occurred because of the pandemic.