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Dear Clients,
We want to make you aware of several current issues affecting taxpayers due to processing delays and systemic errors within the Internal Revenue Service (IRS). These issues have resulted in some taxpayers receiving erroneous notices, despite having filed and paid their taxes on time and in full.
IRS Electronic Payment Processing Delays
The IRS has reported delays in processing certain electronic tax payments, which has led to some taxpayers receiving balance due notices (such as CP161) even though the payments were submitted properly and on time. This is a known processing issue on the IRS’s end—not the result of any action or error on your part.
What You Need to Know:
- If you submitted your payment electronically and on time, no immediate action is required.
- If your payment has not been processed by July 15 and you receive a notice, you should contact the IRS using the phone number provided on that notice.
- Any penalties or interest associated with these delayed payments will be automatically adjusted once the payment is correctly applied.
Additional Systemic IRS Issues (Reported by the AICPA)
The AICPA has recently reported a number of ongoing systemic issues affecting various types of returns and notices. These include:
- Erroneous notices for Form 1041 (trusts), Form 1040 (individuals), and Form 1120 (corporations) related to estimated tax penalties, even when the 100% prior-year payment rule was met.
- When calling the IRS, you may reference “SERP Alert 25A0128” (dated May 2, 2025), which addresses this issue internally.
- Form 1041 trust taxpayers receiving CP134B notices incorrectly charging underpayment interest or showing incorrect prior-year overpayment applications.
- Incorrect penalty assessments on Form 3520 (Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts), despite timely and accurate filings.
- E-filing issues with Form 1041-T, particularly when submitted through CCH software. These prevent proper e-filing and may lead to misallocated tax amounts.
- CP59SN notices sent to taxpayers who received valid filing extensions to October 15, 2025, indicating an error in the IRS’s records.
How We're Supporting You
We understand how frustrating it can be to receive incorrect notices, especially when your filings and payments were made accurately and on time. Please know:
- We are closely monitoring these IRS issues and are in regular contact with industry resources such as the AICPA.
- If you receive any notices from the IRS that seem incorrect, please contact our office right away. We are here to assist with reviewing the notice and determining the appropriate response.
- In many cases, erroneous penalties and interest can be corrected once the IRS resolves their system issues or after direct contact with a service center representative.
You can view the AICPA's latest updates on these issues here: AICPA IRS Systemic Issues Update
We will continue to keep you informed as new information becomes available. Please don’t hesitate to reach out with any questions or concerns.
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