By Brian Maass

DENVER (CBS4) – Accountants along Colorado’s Front Range are telling CBS4 that dozens of clients who paid their 2019 taxes are nonetheless getting menacing letters from the IRS. Those letters are threatening late fees, penalties and in some cases, property seizure.

“Well they’re frightened,” said Denver CPA William Fraser, “They don’t understand why the government, the IRS, would be chasing after them when they’ve paid their taxes.”

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Fraser said he has about 30 clients who paid their 2019 taxes but are still getting the intimidating letters from the feds. He says his clients are “frightened, angry, stressed, worried because the letters say they’re going to come take their assets.”

Tom Conradt, a Denver tax attorney, estimates “easily 50 of our clients made payments but were not credited. They’re freaked out and very scared.”

The problem appears to partly be a consequence of the COVID-19 pandemic but also partly due to ongoing issues with the IRS like archaic computer systems, slashed budgets and understaffing that are now causing consequences for taxpayers.

When the pandemic took hold in 2020, the IRS sent nearly 60,000 employees home to work and more than 500 IRS offices were shut down. The remote workforce meant lots of mail that didn’t get opened in a timely manner and a gap in customer service as phone calls from the public were not answered.

As of late last year, there were approximately one million unprocessed tax returns from 2019 and three million pieces of unopened mail. Paper tax returns and letters from taxpayers sat unopened in trucks in post office parking lots for months while IRS offices were closed down.

(credit: CBS)

“It’s a giant backlog,” said Conradt, “Systemic exacerbated by COVID. They are so incredibly backlogged,” observed the Denver tax attorney.

He said there is a “giant disconnect” with payments sent in and being cashed by the IRS, but not being processed and automated delinquent notices are being sent out.

“This is a massive, massive problem that’s going to take some time to fix,” said Conradt.

Another Colorado CPA said he, too, has dozens of clients who paid their taxes but are receiving delinquency notices.

“When IRS received checks they got cashed immediately, however they have not posted the payments to taxpayers accounts. Therefore, the computers do not have the credits and automatically begin sending out delinquency notices.”

Raphael Tulino, an IRS spokesperson, told CBS4 the pandemic “put us behind the 8 ball.” He said the agency is asking for patience.

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“IRS is committed to working with taxpayers as we navigate tax administration in and through a COVID environment,” said Tulino. “Although there are still some limited service delays and timing issues, if you get a letter or notice from IRS please respond to it and consider IRS is flexible and will work with you based on your complete set of facts and circumstances.”

Fraser said he is telling clients to relax.

(credit: CBS)

“They will get around to this, they will get it fixed,” he said. “They will get your account straightened out, they will remove the interest and penalties.”

But he cautioned it may take the IRS six months or more to get things worked out.

Additional Resources:

-Consider using the TAS or Taxpayer Advocate Service with the IRS:

Taxpayer Advocate | Internal Revenue Service (irs.gov)

-There is also the IRS’s Taxpayer Bill of Rights:

Taxpayer Bill of Rights | Internal Revenue Service (irs.gov)

-You have the right to challenge the IRS and be heard:

Taxpayer Bill of Rights 4: The Right to Challenge the IRS’s Position and Be Heard | Internal Revenue Service

-Here is an update from the IRS on how COVID has impacted their operations:

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irs.gov/…/irs-operations-during-covid-19-mission-critical-functions-continue

Brian Maass