Update on IRS and IDOR Processing Problems

Submitted by Richard Allen

We have been receiving information about IRS and IL Department of Revenue processing problems caused by COVID-19 processing delays.

IRS Processing Problems.

We previously reported about 10 or 12 million unprocessed mail items sitting in mail trailers at IRS campus service centers. I have heard of reports that individuals had e-Filed returns before the extended July 15 2020 due date. Then, the same individuals mailed a check with a Form 1040-V payment voucher.

These check payments are caught in the IRS mail processing backlog. Meanwhile, many taxpayers have received IRS bills for the outstanding balance due – with interest and penalties. (Even though the actual check payment has not yet been processed by the IRS.)

The IRS has announced that they will cease sending out these 2019 overdue payment bills until they get caught up in their mail processing. If a taxpayer contacts you, just tell them to ignore the IRS balance due billing, until the IRS has processed their payment in a few months. The taxpayer will probably get interest income from the IRS when they eventually process the payment due to the IRS processing delays.

IDOR Processing Problems.

Many IL Department of Revenue employees are still working remotely outside their Springfield offices. We have heard of two different kinds of delays.

1. IDOR sends out a notice that some additional information is needed to process their return. I had a client who called them with a question about their notice. The taxpayer was told by the IDOR employee that it could take possibly 8 months for IDOR to process the taxpayer’s response to their own notice.

2. IDOR’s IL-1040 was filed electronically, with a withdrawal to be made from the taxpayer’s bank account. We have heard of several instances where IDOR sent out a past due bill with interest and penalties, even though they had made a bank withdrawal at about the same time. These withdrawals and the IDOR return processing have crossed each other. Taxpayers should ignore these notices if they have verified that IDOR has already made the withdrawal. IDOR will probably correct their files – eventually.