IRS Error Hits Some Disaster-Affected California Taxpayers with Incorrect Due Dates

The IRS has sent Notice CP-14 letters to taxpayers who still owe 2022 taxes, demanding payment within 21 days and threatening penalties and interest for delays. Some of those letters were sent to taxpayers in California who had been granted an extension to file and pay their taxes.1

"While the notice received by taxpayers says they need to pay in 21 days, most California taxpayers have until later this year to pay under the disaster declaration," the IRS said in a tweet Wednesday.2

Earlier this year, the IRS granted most California taxpayers an extension to Oct. 16 after winter storms caused mudslides and flooding across much of the state.3 The agency often extends deadlines for taxpayers living in areas affected by natural disasters. But IRS computers haven't been able to distinguish between taxpayers who are granted extensions and those who aren't.

The notices confused and panicked some taxpayers, who flooded the IRS with calls, leading to hold times of up to 2 hours.

"The IRS apologizes to taxpayers and tax professionals for any confusion as we continue to review the situation. Taxpayers receiving these letters do not need to call the IRS or their tax professional."4

The IRS in April announced a plan to crack down on high-net-worth individuals. The plan was to draw on the $80 billion in additional funding promised by President Biden's Inflation Reduction Act. Though the agency may be forced to pare back those plans. Lawmakers agreed last week to slash its funding by $21 billion as part of the debt-ceiling agreement.

The Congressional Budget Office has estimated that IRS revenue could be boosted by $124 billion in the coming decade with additional staff and new technology.

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