You paid your 2023 taxes. Why is the IRS saying you didn't?

Imagine opening a letter from the IRS in early June that says you owe $6,000 in federal income taxes for 2023. Except you paid that bill. On time, mind you. And now, the IRS is sending you a notice demanding you pay up?

One Michigan senior was told just that. Others here and elsewhere are getting this same kind of letter saying they owe, in some cases, thousands of dollars in unpaid income taxes. Except, they wrote the checks and already paid the money.

It's a massive mess but one that's only bubbling up in tax circles. As of June 10, the Internal Revenue Service didn't issue any press releases saying, hey, we sent out a bad batch of letters.

Before you write another check, though, take a step back, do a little research and see if you're one of many who could be dealing with a big IRS glitch here.

Free tax filing: 6 ways to file without paying a fee.

No, it doesn't seem that the IRS lost the check. Check your bank statement. The feds could indeed have what you owe. Rather, it seems there's some glitch at the IRS involving the erroneous notices in 2024.

Tax professionals say they're hearing from plenty of clients in 2024 who are wrongly receiving CP14 notices that spell out what someone owes for taxes. Except, I repeat myself, they wrote the check and already paid their taxes.

One can only imagine the blood that's boiling at some homes.

The IRS did not respond to questions about the letters as of early Wednesday morning.

Wednesday afternoon, however, hours after this column initially ran online, the IRS sent me a link to what it was posting at its website that day. The IRS apologized to affected taxpayers for inconvenience and acknowledged that it was aware of some erroneous CP14 notices being issued.

"Taxpayers who filed electronically or by check with their 2023 tax return, may show their accounts as pending," the IRS stated. And that's true, the agency said, even though the IRS has received and processed payment through their bank or credit union.

"The notice may have been initiated before the payment was processed on the account," the IRS said. Or the IRS indicated that the payment might have been processed "but contained errors and requires additional handling to address the error before updating the tax account from 'pending' to 'paid,' the IRS stated.

The IRS's advice: "Taxpayers who receive a notice but paid the tax they owed in full and on time, electronically or by check, should not respond to the notice at this time."

The IRS said it is researching the situation and will provide updates as soon as possible.

Tax professionals have seen situations where the IRS has sent out a notice before applying the payment, according to the American Institute of CPAs.

In some cases, one CPA said the IRS appeared to be crediting the paper check to the account when the IRS processed the check, not when the check was mailed as it should have done.

One CPA said the erroneous CP14 letters that some clients received involved situations where the IRS did not apply 2023 estimated tax payments correctly, and in some cases didn't apply the 2023 tax due payment. As a result, the IRS notice incorrectly showed a large tax due, along with penalties and interest.

Naturally, any IRS letters are alarming. Typically, tax professionals say their approach has been to write a polite response letter to the IRS and submit proof of the payments made.

George Smith, a CPA with Andrews Hooper Pavlik in Bloomfield Hills, MIchigan, said he had six clients receive these letters earlier this month and he sent the IRS a response each time.

Smith said all of the erroneous IRS letters that he saw were dated June 3 and sent out of an IRS office in Holtsville, New York, on Long Island. "It was weird, they all came in a flurry," Smith said.

One client supposedly owed $6,000 and another supposedly owed $1,300 in income taxes.

Except, they paid what the IRS said they owed.

These clients also made estimated federal income tax payments throughout 2023 but Smith said the IRS letters he saw only reflected what that IRS said was the remaining balance still due for 2023. So, he believes that the estimated payments made earlier in 2023 were properly credited in those cases.

It's his understanding that the erroneous letters are only being sent to taxpayers who paid their taxes to the IRS via a paper check. Other tax professionals in his office said a few of their clients received similar erroneous letters, too.

He doesn't believe that the problem has cropped up for taxpayers who paid the IRS online or via a direct payment out of their bank accounts.

The taxpayer sees that their check cleared their bank accounts even though the IRS has issued a CP14 notice saying they did not receive the payment.

"It's annoying," Smith said. "And it created anxiety for my clients."

He'd suggest that do-it-yourself taxpayers who get these letters respond to the IRS, as well, and include proof of payment. His clients weren't able to get a copy of the canceled check, as the IRS uses an ACH clearing process, so they sent a copy of the bank statement.

The clients mailed the checks on or before the April 15 deadline. And he says their payments all cleared on April 19.

Some taxpayers, though, say they have had issues with getting the IRS to properly credit some electronic payments. Edgar Dworsky, who runs the consumer education website, Consumer World, said for two years in a row, the IRS has sent delinquency notices called a CP161, with interest and penalties, in May to his condo association for nonpayment of taxes.

"Both years, by or before the deadline, I paid our taxes in full electronically via EFTPS -- the Treasury's electronic tax payment system," Dworsky said.

"We paid the taxes — over $1,900 — this year on April 15, 2024, in full and I have an electronic receipt," he said. He said he was told by IRS employees that there's a problem with crediting some accounts properly if they paid electronically and they don't know when it will be fixed.

California-based Spidell, which offers tax professionals updates and information, posted an alert on June 7 that indicated that erroneous IRS letters were being mailed out.

"We’ve received inquiries from numerous tax professionals," Spidell stated, "asking why their clients are receiving CP14 notices indicating a balance due even though the clients can substantiate they timely paid all tax due."

Extra tax deduction: Exclusively for older adults.

According to Spidell, the "IRS confirmed that there is a nationwide delay in processing payments, resulting in erroneous balance due notices being sent when there is in fact no tax due."

Spidell said the IRS was advising tax professionals and their clients to wait six to eight weeks to see if the problem resolved itself and see if payments were properly credited to accounts.

But if the payments are not posted after that, Spidell said, the tax professional or client will have to provide proof of payment to the IRS to ensure that no penalties are imposed.

Some tax professionals, like Smith, are simply sending out letters and confirmation of those payments now to avoid any potential hassle ahead.

The IRS is saying that taxpayers should not respond to an erroneous CP14 at this time, though.

In its statement online, the IRS said taxpayers with an IRS account can login to their accounts at IRS.gov to verify if the IRS received their payment and is working to correct any potential payment processing errors.

Taxpayers will see a “pending payment” note in the Payment Activity Section of their Online Account, the IRS said. Taxpayers who do not have an IRS Online Account can visit IRS.gov and follow the steps to create an account.

Another IRS tip: Make sure to check the Online Account under the Social Security number that made the payment."Any assessed penalties and interest will be automatically adjusted when the payment(s) are applied correctly by the IRS," according to the IRS.

The IRS said taxpayers who paid only part of the tax reported due on their 2023 return should pay the remaining balance or follow instructions on the notice to enter into an installment agreement or request additional collection alternatives.

Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X (Twitter) @tompor.

This article originally appeared on Detroit Free Press: IRS taxes 2023: Agency says some didn't pay. But they did.