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 (Part One)
Imagine you live in a county that has been battered by storms or wildfires so severe that the federal government has included your county in a disaster declaration. Imagine that the IRS grants you an extra four or six months to file your tax return and make your tax payment. Then imagine you file your return early but properly decide to hold off on making payment until the postponed deadline. That is what an estimated one million taxpayers living in California and seven other states (Alabama, Arkansas, Florida, Georgia, Indiana, Mississippi, and Tennessee) have done in the last few months. To their surprise and dismay – and contrary to IRS guidance and press releases – those taxpayers are now receiving “notice and demand” collection letters from the IRS telling them their payments are currently due and the IRS will begin to charge interest and penalties if the taxpayer doesn’t pay by a specified date on the notice which is months earlier than IRS guidance permits. Confused taxpayers and practitioners are wondering why they are receiving a balance due notice since they live in a disaster relief area and had months of additional time to pay.
Short answer: Disaster area taxpayers can ignore the CP14 collection notice when the original due dates fall within the postponement period. The payment due date on the collection notice is wrong. The correct payment due date is stated on the disaster declaration. Taxpayers can verify the correct payment due date by checking irs.gov.
If you want to understand this perplexing situation, read on, but it involves several twists and turns.
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