March 28, 2022

Automatic Notices Now Suspended for Non-Profit Organizations

The historic backlog of unprocessed communications, income, employment, and other tax returns continues to plague the IRS.  In December, there were a reported 6 million unprocessed individual returns and over 2 million unprocessed amended returns. Since the start of the 2021 tax season, the problem has gotten worse with updated estimates showing the backlog growing to 24 million. At the same time, customer service has also hit historic lows. Only 11% of calls were answered last year leaving taxpayers frustrated and with very few options.

To make matters worse, automatic notifications which include reminders to file, delinquent payment notices, and even investigation notices, have continued to be sent. Taxpayers that have filed, or taken proper action, continue to receive erroneous notices. It has created a vicious circle featuring more attempts to contact the agency (which are rarely successful), only to be met months later with additional notices. It has only made matters worse.

Relief came in mid-February when the suspension of automatic notifications for individual taxpayers was announced. Although successful, it did little to provide relief to others who continue to receive the notices. The good news is the IRS has just announced the suspension of automatic notices will be extended to include tax-exempt organizations as well. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.

Suspended Automatic Notices

Most of the suspended notices relate to IRS Form 990 and forms in that series but also include Form 5500 related notices as well.  The suspended automatic notices include:

• CP214, Reminder Notice About Your Form 5500-EZ or 5500-SF Filing Requirement
• CP217, Form 940 Not Required — Federal, State, and Local Government Agencies
• CP259A, First Taxpayer Delinquency Investigation Notice — Form 990/990EZ/990N
• CP259B, First Taxpayer Delinquency Investigation Notice — Form 990PF
• CP259D, First Taxpayer Delinquency Investigation Notice — Form 990T
• CP259F, First Taxpayer Delinquency Investigation Notice — Form 5227
• CP259G, First Taxpayer Delinquency Investigation Notice — Form 1120-POL
• CP259H, First Taxpayer Delinquency Investigation Notice — Form 990/990EZ
• CP403, First Delinquency Notice — Form 5500 or 5500-SF
• CP406, Second Delinquency Notice — Form 5500

At this time, the IRS has not indicated when automatic notifications will resume. It is possible that taxpayers will receive one of the above notices in the coming weeks. Generally, there is no need to act as long as the return was filed appropriately.  

Contact Us

The IRS is facing unprecedented challenges in managing return processing, issuing refunds, and responding to taxpayer inquiries. The expanded suspension of automatic notices for tax-exempt organizations is welcome news. If you have questions about a recently received IRS notice or need assistance with a tax or accounting issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.