The Internal Revenue Service is giving taxpayers a break if the checks they mailed in to pay their taxes still haven’t been opened up yet and are sitting in the trailers the IRS had to set up during the novel coronavirus pandemic.
This spring, as many IRS offices remained shuttered, a backlog of millions of pieces of unopened mail accumulated in trailers set up outside IRS facilities. As more IRS employees returned to work to deal with tax season, they began to sort through and process the mail, but that hasn’t stopped more correspondence from coming in every day.
Rathi Murthy is the Chief Technology Officer at Varo Bank, the first nationally chartered all-digital consumer bank in the United States. In this role, she leads the company's end-to-end technology strategy, overseeing the design and development of secure, scalable, and AI-powered digital banking platforms. Her leadership is instrumental in advancing Varo's mission to build inclusive, accessible, and real-time financial solutions for millions of consumers.
A seasoned technology executive, Rathi brings over 25 years of experience leading innovation and digital transformation at some of the world's most recognized technology and financial services companies. Prior to joining Varo, she served as Chief Technology Officer and President of Expedia Product & Technology at Expedia Group, where she modernized the company's global travel infrastructure, integrating AI-driven personalization, modular architecture, and advanced cloud capabilities across its family of brands.
Earlier, she held executive leadership roles at Verizon Media and Gap Inc., where she led enterprise cloud migrations, e-commerce platform evolution, and large-scale product delivery initiatives across global markets.
Rathi also served as Senior Vice President and Chief Information Officer of Enterprise Growth at American Express, where she was responsible for the technology strategy and operations of the Serve platform and a suite of prepaid products including Bluebird.
Rathi's early career includes engineering leadership roles at eBay, Yahoo!, Sun Microsystems, and WebMD, where she consistently delivered improvements in platform stability, operational agility, and customer experience.
In addition to her executive work, Murthy is a board member at PagerDuty, Inc., a leader in digital operations management, and serves as an External Expert Advisor to the University of San Francisco's Board of Trustees Committee on Information Technology Strategy. She is also a regular speaker at industry events and leadership forums, offering thought leadership on topics such as fintech innovation, integrating AI, platform transformation, and executive technology leadership.
Guy Baker, CFP, Ph.D., is the founder of Wealth Teams Alliance in Irvine, California.
He is a member of the Forbes 250 Top Financial Security Professionals list and is author of "Maximize the RedZone," a guide for business owners, as well as "The Great Wealth Erosion," "Manage Markets, Not Stocks" and "Investment Alchemy." He received the 2019 John Newton Russell Memorial Award for lifetime achievement in insurance.
Last week, amid complaints that the IRS had begun sending balance due notices to some taxpayers, even though they had already sent in checks with their tax filings for trusts and estates, the IRS updated its web page on IRS operations during COVID-19 with new information on pending check payments and payment notices, saying that the payments will be posted as of the date received, as opposed to the date when the IRS finally gets around to processing them. The IRS warned taxpayers not to cancel their checks in the meantime, as the IRS will eventually get around to processing them.
“If a taxpayer mailed a check (either with or without a tax return), it may still be unopened in the backlog of mail the IRS is processing due to COVID-19,” said the IRS. “Any payments will be posted as the date we received them rather than the date the agency processed them. To avoid penalties and interest, taxpayers should not cancel their checks and should ensure funds continue to be available so the IRS can process them.”
That should help taxpayers avoid interest and penalties, as long as the check hasn’t been canceled, or it doesn’t bounce.
“To provide fair and equitable treatment, the IRS is providing relief from bad check penalties for dishonored checks the agency received between March 1 and July 15 due to delays in this IRS processing,” said the IRS. “However, interest and penalties may still apply.”
The problem has been particularly acute for taxpayers who are filing Form 1041 estate and trust tax returns and receiving the balance due notices.
“As many advisers have discovered due to clients (especially trusts) receiving notices regarding payments supposedly due on tax returns where payments had been mailed in when the return was filed at July 15, the IRS is behind in processing items mailed to the agency and that includes certain tax payments,” wrote Ed Zollars, a partner in the CPA firm of Thomas, Zollars & Lynch, in a blog post for Kaplan Financial Education.
Besides being short on staff for opening the mail, the IRS is also dealing with the perpetual problem of answering its busy phone lines for taxpayers, and it recommended against calling the agency.
“Due to high call volumes, the IRS suggests waiting to contact the agency about any unprocessed paper payments still pending,” said the IRS. “See www.irs.gov/payments for options to make payments other than by mail.”
The current delays in mail service reported around the country may be exacerbating the backlog at the IRS as well. The recently appointed Postmaster General, Louis DeJoy, has come under fire for reforms this summer at the U.S. Postal Service like curbing overtime, prohibiting return trips to pick up undelivered mail, discarding high-volume envelope-sorting machines and removing mailboxes, resulting in slower mail delivery. DeJoy, a logistics executive and former finance chairman for the Republican National Committee, has also reassigned longtime executives at the USPS, leading to accusations that he is trying to sabotage mail-in voting ahead of the elections in November at the behest of President Trump, who has ramped up his criticism of states’ moves to allow universal mail-in voting in response to the coronavirus pandemic, claiming it would lead to voter fraud. House Democrats plan to return to Capitol Hill next week to vote on a bill to stop the changes at the USPS, at least until after the election, and have summoned DeJoy to an oversight hearing.
