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IRS Glitch Sends Erroneous Notice to 109,000, Saying They Don't Qualify for Full Stimulus

Chris Gaetano
Published Date:
Feb 5, 2021

National Taxpayer Advocate Erin Collins said not to worry if you're one of the 109,000 people who received a Notice CP21C from the IRS telling them they'll get a smaller stimulus payment or won't get one at all, as the mailings were sent erroneously due to a system glitch.

The notice that should have gone out was one saying the IRS couldn't issue to these taxpayers its first Economic Impact Payment (the $1,200 that was part of the CARES Act) because it hadn't processed their 2019 return and there was no 2018 return to use as an alternative. The Taxpayer Advocate said that recipients can disregard the notice, and eligible individuals can still claim the Recovery Rebate Credit (RRC) on their 2020 tax return.

The taxpayer advocate blamed the IRS's antiquated IT infrastructure for the problem, noting it is just the latest in a series of correspondence mishaps linked to the agency being "overwhelmingly reliant" on legacy systems as old as 25 years. Issuing the CP21C may be an example of this, as it was a remnant from 2008, when economic stimulus payments were subject to offset. While the IRS does have a modernization plan in place, it lacks adequate funding for implementation.

"I renew my call to Congress to fund the IRS’s IT infrastructure to make it robust, nimble, and customer friendly," said Collins. "Regrettably, taxpayers are once again caught in the mire of the IRS’s challenges to issue correct correspondence."

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