If you have an uncashed tax check at the Internal Revenue Service (IRS), you’re not alone. I am hearing this from some taxpayers about how they have sent checks to the IRS, early in the tax season, and they still have not been cashed. Making matters worse, the IRS has been sending out underpayment or failure-to-pay notices for those payments.
First, you should know that this is clearly a systemic issue. It’s not you, it’s them. What exactly is the cause? A combination of unopened mail and the pandemic. The IRS recently noted that “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.”
Second, you should not panic. If you mailed your payment, it will eventually be posted. According to the IRS “Any payments will be posted as the date we received them rather than the date the agency processed them.” Whatever you do don’t cancel your original check. Just because it hasn’t been cashed or credited doesn’t mean that it has gone missing. It’s likely just temporarily diverted.
Also, don’t spend that money. If you’ve written a hefty check, assume that the IRS will cash it any day now. Don’t assume that you can write other checks on the same funds. While 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, interest and penalties may still apply. When the IRS reopened (kind of) in June, the estimated backlog of unopened IRS mail stood at 11 million. The IRS has been tasked with sorting through that mail (and opening new mail) while relying on reduced or stay-at-home staffing.
Finally, don’t call. Due to high call volumes, the IRS says you should wait to contact the agency about any unprocessed check payments still pending.
If you have a payment to make and you’re worried about it going missing, there are electronic payment options.
- You can pay your taxes directly from your checking or savings account. To make a payment, click on over to the ‘Direct Pay Page’ here. You can schedule a payment or pay the same day, but IRS Direct Pay won’t accept more than two payments within 24 hours. And if you owe bunches, note that each payment must be less than $10 million.
- Consider a same-day wire from your bank or financial institution. Contact your bank or financial institution (not the IRS) for details, including fees and deadlines. To make a payment, download and complete the ‘Same-Day Payment Worksheet’ here (it downloads as a PDF) to take with you to make the wire. Some of you may ask, what about making international wire transfers? Well, since you asked. To start with, U.S. taxpayers who reside in the United States must of course pay their taxes in U.S. dollars. But what about international taxpayers? International taxpayers without a U.S. bank account are allowed to transfer funds from their foreign bank account directly to the Internal Revenue Service to pay their taxes.To do this, you will need to complete that same ‘Same-Day Taxpayer Payment Worksheet’ that I mentioned a few sentences ago (you can find it again ——>here). Be sure to include the appropriate Tax Type Code (you’ll find your options on the bottom of the Worksheet) and tax period so that the funds will be properly applied to your tax liability. After you have completed the Worksheet, take it to your bank to initiate the wire transfer. Your foreign bank must have a banking relationship with a U.S. bank and your bank must be able to transfer money to the U.S. You’ll need the Routing Transit Number (RTN), also known as the American Banking Association (ABA) number for IRS. You may also need the IRS account number. You’ll find it here: IRS account number – 20092900IRS IRS account RTN/ABA Number – 091036164 US TREAS SINGLE TX. There may be a charge from your bank for this service. If your foreign bank needs assistance, they may need to contact the Federal Tax Payment Service Customer Service at 314-425-1810 (Please note: this is not a toll free number). You can find more information about ‘Foreign Electronic Payments’ here. Finally, while you can initiate a transfer from an international bank to pay your taxes, payments must actually be remitted to IRS in U.S. dollars. Not the Euro, yen, peso, franc, yuan, Aruban florin, or even Canadian dollars. ONLY United States dollars.
- Electronic Funds Withdrawal (EFW) is an option that you can use to pay by direct debit from your bank account. The IRS doesn’t charge a fee to use EFW, but your financial institution might (check first to avoid a last-minute panic). You’ll need to know your bank routing and account numbers. For more information about EFW, click here.
- You can pay what you owe by credit or debit card (for more information click here). Most of the approved IRS payment processors accept MasterCard, Visa, Discover and American Express. Generally, there’s no limit on the amount you can pay, but you are restricted to just two credit card payments in one year for the same individual tax bill (click here for more information). High-balance payments of more than $100,000 may require coordination with your credit card or debit card provider.
- Use the Electronic Federal Tax Payment System (EFTPS) to pay by phone (or online here). To make a payment using EFTPS by phone, call (800) 555-3453. People who are deaf or have a speech disability and who have access to TTY/TDD equipment can call (800) 733-4829. To make a payment using EFTPS online, log in here, and follow the prompts. You can schedule your payment by 8 p.m. EST at least one calendar day in advance of the due date. It’s worth noting that your tax payment is due even if the website is not available, so plan ahead.
For more information, visit www.irs.gov/payments for options to make payments other than by mail.
Taxpayers who mail tax returns and other correspondence to the IRS should expect to wait longer than usual for a response. While the IRS is now receiving mail, the mail processing functions remain scaled back to comply with social distancing recommendations. The IRS’ ability to correspond with taxpayers about various issues, including requests for information needed to process a tax return, remains limited.
So what about those tax returns?
- If you haven’t yet filed your return, the IRS advises that they are still experiencing processing delays for paper tax returns.You should file your tax return electronically. Solid Tax Solutions will prepare and electronically file your tax return. But keep in mind that the extension deadline (if a request for an extension was filed) is October 15 (which is six months from the ORIGINAL filing date, not the extended filing date).
- If you have already filed a paper return, but have not yet heard from the IRS, don’t panic: the IRS will process your tax return in the order that it’s received. Do not file a second tax return or contact the IRS about the status of your return.
So in closing, remember to keep in mind that patience is key (particularly when dealing with the IRS). Things are s-l-o-w-l-y getting back to normal, it’s just taking time.
AS ALWAYS: PLEASE, PLEASE, PLEASE STAY WELL and STAY HEALTHY!
Bruce – Your Host at The Tax Nook
Our Firm’s Website: SolidTaxSolutions.com