Barry Dolowich, Tax Tips: Don’t panic, IRS warning a mistake

What a week to be a California income tax return preparer! I have been inundated with telephone calls, emails and text messages from irate clients after their receipt of an IRS love letter, Notice CP14, demanding that they pay their 2022 Federal tax balance by June 26, 2023 instead of Oct. 16, 2023 as instructed by yours truly.

The letter also threatens that if full payment is not made by June 26, 2023, the taxpayer can be subject to penalties as high as 50%.

As expected, IRS the toll-free telephone number provided within the notice was useless as their switchboard was completely overwhelmed making it virtually impossible to speak to a human. Oh, the frustration!

Reminder: Most California counties (including Monterey County) were granted Federal and California Disaster Relief providing an automatic extension to BOTH FILE and PAY their individual income tax returns and related tax liabilities.

In tweets days after the letters arrived and the hysteria was in full swing, the IRS stated that California taxpayers who qualify for the disaster-related Oct. 16 postponements (Aug. 15 for Modoc and Shasta counties) still have until the Oct. 16/Aug. 15 postponement deadline to pay their 2022 tax liabilities. The IRS stated that taxpayers receiving erroneous CP14 letters do not need to call the IRS or their tax professionals.

The IRS acknowledged that the CP14s are automatically generated when taxpayers have a balance due, but that taxpayers eligible for the disaster postponements do not have any balances currently due. From the IRS’s tweets: “The IRS apologizes to taxpayers and tax professionals for any confusion as we continue to review the situation.”

Welcome to my world.

Barry Dolowich is a certified public accountant and owner of a full-service accounting and tax practice with offices in Monterey. He can be reached at 831-372-7200. Please address any questions to Barry at PO Box 710 Monterey, CA 93942-0710 or email: [email protected]