Your IRS payments should go smoothly. But that’s not always the case. Taxpayers routinely find themselves facing issues with payments, endless delays with their refunds, and payment plans defaulting. These small “hiccups” trigger further problems, including mounting interest, harsh penalties, and, in the most serious cases, collections.
The IRS processes more than 200 million transactions a year. That means mistakes happen more often than most people realize. To avoid tough consequences, you need to take control and solve issues before they snowball. In this article, we’ll cover the most pressing IRS payment problems, what the first steps are, and how an expert can help you navigate them. To get help now, contact us today.
Key Takeaways
- The IRS has a significant backlog of returns, which can delay payment processing.
- Lost or misapplied payments are often a result of incorrect Social Security numbers, payments credited to the wrong account or tax year, or system failures.
- Refund delays, on the other hand, can be down to identity verification requirements, processing backlogs, errors, and the Treasury Offset Program seizing refunds.
- Missing a payment on your installment plan or failing to stay up to date on your new taxes can trigger your agreement to default.
- Working with a qualified tax attorney can help you navigate the most common IRS payment problems and get back on track quickly.
Lost or Misapplied IRS Payments
Let’s say you’ve paid the IRS online, but your account still says you owe money. Alternatively, you start to receive letters, like the CP14 notice, showing that there’s still a balance due. This can be a frightening experience, especially when you’re dealing with large sums of money. However, there’s often a simple reason for a lost IRS payment.
Reasons the IRS Loses Payments
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When you’re facing an IRS lost payment, there could be several reasons, including:
- Someone entering an incorrect Social Security number
- Your payment accidentally getting credited to your spouse’s account
- Electronic payments failing due to systems being down or other errors
- Misplaced checks waiting to be processed by the IRS
- The agency applying your payment to the wrong tax year
How to Prove You Made a Payment
Gathering evidence is your strongest defence. When the IRS has lost your payment, collect the documentation that proves you made it. This proof may include bank statements, printed confirmations from IRS Direct Pay or EFTPS, and copies of money order receipts.
Work with a Trusted Tax Attorney
Regardless of the reason, taking action is essential in preventing further action. Working with a trusted tax attorney is the fastest way to resolve your lost IRS payment. Contact the Law Offices of Stephen B. Kass at 212-843-0050 for support on the next steps.
IRS Refund Problems
Waiting for a refund from the IRS can be an excruciating process. You may be getting radio silence, or your refund could have disappeared entirely. Either way, when you’re legally entitled to a refund, you deserve to know what has gone awry. Delays can last weeks or, in the worst cases, months. But why do they happen, and what can you do about it?
Common Causes of Refund Delays
Let’s take a look at some of the common causes of IRS refund delays:
Identity Verification Requirements
When the details you share don’t match the agency’s record, the IRS may flag it. You’ll know about this when you get a letter asking you to verify your identity, either online or on the phone. The lengthy process can add a matter of weeks to your refund timeline.
Processing Backlogs
The truth is that the IRS has a huge backlog to review. Your tax return can easily end up in a queue that slows things down. Moreover, if your return claims certain credits, like the Earned Income Tax Credit, things can take even longer, as this credit is subject to frequent reviews.
Errors or Missing Information
One of the biggest causes of IRS refund delays is errors. If your documentation is incomplete or includes mistakes, it could sit in manual review queues for an extended time. It doesn’t end there. Amended returns can take even longer to go through the process.
Treasury Offset Program
If you owe outstanding debts to federal or state agencies, the government has the right to seize your refund and use it to cover this. Common debts include unpaid student loans, state income taxes, past-due child support, and any other federal debts.
The End of Paper Refunds
Additionally, the IRS is phasing out issuing paper checks as refunds. That means that you’ll need to share your bank account details with the agency when filing your return. Failing to do so can lead to serious delays when it comes to your IRS refunds.
If you don’t have a bank account, you should open one before you file your tax return. Alternatively, you can arrange to get a prepaid debit card that accepts direct deposits.
How to Track and Resolve Your IRS Refund
First up, you need to understand how long IRS refunds take. If you have e-filed your return, most refunds arrive within 21 days. Paper returns take longer. You can expect to wait a minimum of six to eight weeks if you choose to file manually.
The IRS has a ‘Where’s My Refund?’ tool you can use to track the status of your refund. To use this, you’ll need your Social Security or individual taxpayer ID number (ITIN), your current filing status, and the exact refund amount on your return.
The system updates either overnight or each day, so you will get the most up-to-date information here. If your return shows a “still processing” after the expected wait time, it’s likely that your return needs an additional review.
You can call the IRS refund hotline to enquire about your status. A qualified tax attorney can act on your behalf and often get quicker resolutions to IRS refund problems.
IRS Payment Plan Problems
If you can’t pay your full debt immediately, you can arrange an installment agreement with the IRS. This gives you extra time to pay your back taxes through smaller, monthly repayments. However, these plans can default in certain circumstances, including the following:
You Missed a Payment
IRS payment plans come with strict guidelines. Missing even one payment could put your plan at risk. Before your installment plan defaults, you will typically get a notice warning you about it. However, in some cases, this letter will arrive after your agreement has been terminated.
Falling Behind on New Taxes
When you have committed to an installment agreement, you have to file and pay all new taxes on time. This requirement may catch you off guard, which can lead to your existing plan defaulting. It’s important to stay current on your taxes going forward to keep the agreement.
Misapplied Payments
The IRS may have credited your payment to the wrong tax year or even failed to record it. When the agency system shows you’ve missed a payment, the error will trigger a default notice. In this scenario, you will need to prove that you made the payment on time and request a correction.
What Happens When Your Plan Defaults
If your installment agreement defaults, you immediately lose the protections it gives you. The IRS then has the power to start any collection action against you. The agency will usually file a Notice of Federal Tax Lien, which attaches to your property and also damages your credit.
The IRS can take a selection of routes here, including garnishing your wages, levying your bank accounts, and, in extreme cases, seizing your assets. During this time, you will continue to get both interest and penalties added to the full balance of your tax debt.
How to Fix Defaulted Plans
How you restore the installment plan depends on why it defaulted in the first place and your current financial standing. Here are some of the options you can consider:
Requesting Reinstatement
If you can afford to make the missed payment, you can request that the IRS reinstate your original agreement. You’ll need to pay a small fee here, and there is a limited time in which you can request that this happens.
Asking for a Modified Plan
When your financial situation has changed since you set up the original plan, you may be able to request a modification. You can request to lower your monthly installments or extend the overall repayment window. You will need to prove that you can’t meet the original plan terms.
Renegotiating a Payment Plan
In some cases, neither a reinstatement nor a modified plan will work out. However, you can submit a new request for an installment plan along with your current financial documents. Note: Your new agreement will likely have different terms than your previous plan.
Other Common IRS Payment Issues
While we have covered some of the main IRS payment issues above, taxpayers may find themselves facing minor issues, too. These problems can include:
- IRS system errors: If the agency’s system goes down, your payment may be applied after the deadline. That can lead to penalties and interest on your account.
- Problems with e-payments: When you’re paying via EFTPS or IRS Direct Pay, you may come across system issues, which can make paying challenging.
- Risks of mailing checks: Choosing to mail checks directly to the IRS can be dangerous. This increases your risk of delays, check loss, or even fraud.
Whatever IRS payment problems you’re facing, you don’t have to combat them alone. Working with a professional gives you the guidance and expertise you need to resolve any issues quickly.
Frequently Asked Questions (FAQs)
I paid my taxes, but the IRS says I didn’t. What should I do next?
Gather any financial documentation that proves you’ve made the payment on time. Next, contact a tax attorney to help you contact the IRS about this error.
Why am I still waiting for my IRS refund?
There are several reasons you may be waiting on a refund from the IRS. The agency has a large backlog of reviews, which can increase wait time for taxpayers. Additionally, there may be errors on your return that have triggered an additional review.
Why has my installment plan defaulted?
The most common reason an installment plan suddenly defaults is a missed payment. If you’ve failed to keep up with your monthly payments, the agency may halt your plan. Other causes include falling behind on your new taxes or a misapplied payment on your account.
When to Seek Professional Help
Worried about your IRS payment issues? Don’t wait until the problem gets worse. If you’re dealing with a complex resolution issue — for example, you owe a significant amount, have uncredited payments, or your agreement has defaulted — get the support you need fast.
Professionals can help you negotiate with the IRS, stop enforcement action before it happens, and work to correct misapplied payments. They can communicate with the IRS on your behalf to reach the most favorable outcome for your circumstances.
IRS payment problems are increasingly common. While penalty notices and defaulted plans can seem frightening, they are solvable. Acting sooner rather than later is the best way to protect yourself and your finances. Contact the Law Offices of Stephen B. Kass at 212-843-0050 for advice on how to take back control before these problems spiral.
