Prior to the Covid era, my client's Collection Due Process equivalent hearings had been acknowledged within 30 days and generally assigned to a representative within 60 days. IRS Appeals filings were similarly acknowledged, perhaps 30-60 days and 60-90 days, respectively.
However, about half of my clients' filings from late 2019 have yet to be assigned.
In my opinion, there is a valid argument that my clients have been deprived of due process. I haven't yet been able to present this in a hearing. However, despite the IRS's act-of-God posturing, I believe the taxpayers' have grounds for abatement based on the processing delays.
Some comments from the IRS, below:
IRS mail backlog. At one point, due to the suspension of services, the IRS had a backlog of more than 11 million pieces of unopened mail. This unopened mail backlog consisted of tax returns, tax payments, and taxpayer correspondence. Around 5 million pieces of unopened mail, about half of which are tax returns, remain unopened and are stored at various IRS processing centers as of October 2, 2020.
Processing delays. At a recent American Bar Association Tax Section meeting, an IRS official acknowledged that the IRS is experiencing delays in processing paper returns and other mail due to limited staffing.
According to the IRS official, where a taxpayer paper-filed an extension request, and then e-filed the return before the extension request was processed, the IRS will “systemically abate” any failure-to-file penalties, once the IRS has processed the extension request.
Similarly, the IRS official said that the IRS will "systemically abate" late-payment penalties, as long as paper checks were mailed by the extended July 15th due date, once the IRS has processed all its backlogged mail.
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