Do You Have An Uncashed Tax Check? Here’s What To Do & How To Fix Other IRS Issues

If you have an uncashed tax check at the Internal Revenue Service (IRS), you’re not alone. Scores of taxpayers and tax professionals have been reaching out about uncashed checks. 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 to blame? 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. The IRS says that “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. Remember: when the IRS reopened (sort 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 paper payments still pending. As a tax professional, it makes me nervous to wait – and the IRS has asked us not to call – so I’ve been sending correspondence on behalf of my clients. I don’t expect to receive an immediate response (that mail is just going into the pile, too) but I’m sending it anyway since I like to have a paper trail. The IRS says it will make things right (eventually), so there’s no need to call, file a second return, or (again) cancel any outstanding checks. 

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. 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 to take with you to make the wire. For information on making international wire transfers, check out this prior post.
• 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 (more on those here). For more information about EFW, click here.
• You can pay what you owe by debit or credit card. Most of the approved IRS payment processors accept Visa
  
  V
  , MasterCard
  
  MA
  , Discover
  
  DISCA
  , and American Express
  
  AXP
  . 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. 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. To make a payment using EFTPS by phone, call 1.800.555.3453. People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1.800.733.4829. To make a payment using EFTPS online, log in, 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, see 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. Taxpayers should file electronically through their tax preparer, tax software provider, or IRS Free File. Remember that the extension deadline is October 15 (it’s 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.

What if you receive an outdated notice? In June, the IRS advised that they would begin mailing more than 20 million backlogged letters and notices to taxpayers in the agency’s steps to return to normal operations. But, because of the COVID-19 shutdown, many of the notices were mailed with past due payment or response dates. In most cases, the IRS will not generate a new notice. Instead, the IRS will include Notice 1052, Important! You Have More Time to Make Your Payment, as an insert that will provide a new, updated pay or response date (you can see what it looks like here). Check your notice and:

• Review the last page of the insert to determine if there is a new due date.
• Disregard the notice if you’ve already resolved your issue.
• Contact the IRS using the number on the notice if you have additional questions. Keep in mind that phone lines remain extremely busy as the IRS resumes operations.
• Visit IRS.gov/coronavirus for more information.

And if you’re still looking for information about your stimulus check (economic impact payment or EIP), you’re in luck: as of August 10, 2020, the Taxpayer Advocate can help. You can find out more about your check here.

Things are slowly getting back to normal, it’s just taking time. Remember to keep in mind that patience is key.