Updates with the IRS

 I have some updated IRS information for you today. We have heard in recent years how the IRS has struggled to keep up, at one point having a backlog of up to 24 million unprocessed tax returns. But now the Inflation Reduction Act has put 80 billion dollars into the IRS to update technology and hire more workers. They hired a new commissioner in early April, and he says the IRS now has zero backlog. That’s a first since tax season 2019. Now that they’re caught up they plan on resuming normal debt collection, so if you owe back taxes, get ready. Here’s how that works: the IRS will first send you a CP-14 notice, or a balance-due letter, in May. Following that, the IRS may send up to three additional, previously suspended letters reminding you of your balance due. The final notice, CP-107, warns that if you don’t pay your past-due balance immediately, the IRS can seize your property, tax refunds, wages and bank accounts. If you don’t pay your taxes by the due date, you could get hit with some nasty penalties — plus interest that compounds daily. But if you owe the IRS they generally are willing to work with you — and even reduce penalties — so long as you reach out to the agency in a timely manner with a reasonable explanation (and the issue wasn’t due to “willful neglect” or fraud). Here’s my message today: if you receive a balance due letter from the IRS DO NOT IGNORE IT! The longer you wait, the higher the penalties rack up. Ultimately, the IRS can seize your property, including your car, boat or real estate, if you do not comply. But the good news is there are several ways the IRS will work with you and your situation. There are payment plans and if you get a past due letter use the contact information ASAP. You can go to IRS.gov for full details.