The IRS has now admitted, via a QuickAlert[1] sent the afternoon of April 22, 2021, that there has been a delay in processing payments requested via Modernized e-File.

Many advisers began getting calls beginning on April 16 from clients concerned that payments scheduled to have been withdrawn from their accounts on April 15 had not been withdrawn.  Reports on CPA society discussion forums and on TaxTwitter made it clear that this was not an isolated problem, impacting individuals all across the country.

While some tax software providers’ support departments began reporting that the IRS was aware of the problem, the IRS did not publish anything official until a week later on April 22.

The IRS noted the problem and stated that it was now resolved in the April 22 message:

We identified a delay in processing Form 1040 balance due, Form 1040-X amended, and Form 1040-ES estimated tax payment requests submitted via Modernized e-File. The issue has been resolved, and pending payments are being processed.[2]

Many clients and some advisers were worried about being treated as making the payments after the date they were due, but the IRS announcement provides that these payments will be credited as of their originally scheduled date (for instance, April 15 for first quarter 2021 estimated tax payments):

The taxpayer’s account will be credited with the original requested payment date(s).[3]

The IRS indicates that taxpayers should not re-submit these payments.  But, given the lack of IRS statements for a week, clearly some taxpayers have likely made the payments.

Unfortunately, the IRS doesn’t offer a lot of help here, only giving a method to cancel the extra payment if the taxpayer had resubmitted the payment requests for a future date:

If a taxpayer re-submitted any of these payment requests due to the delay in processing they may cancel them by calling 1-888-353-4537. Cancellation requests must be received no later than 11:59 p.m. Eastern time, at least two business days prior to the scheduled payment date.[4]

If the taxpayer is not able to stop the payment, as seems likely, then it appears the payment’s recovery would depend on the nature of the payment.  If the payment was for the first 2021 estimated tax payment, that would appear to be “stuck” in the IRS system until the 2021 return is filed.  So the only relief would be for the taxpayer to reduce (or eliminate) the second quarter payment, which means they are going to wait until mid-June to be made whole.

If the payment was for a tax return balance (the Form 1040 or 1040-X), then taxpayers will need to wait for the IRS to determine they have extra funds for the year in question and begin the process of repaying those amounts to the affected taxpayers.

[1] “QuickAlerts - Technical - Delay in Processing Form(s) 1040, 1040-X, and 1040-ES Payments Submitted via Modernized e-File,” IRS website, April 22, 2021, https://content.govdelivery.com/accounts/USIRS/bulletins/2cec118 (retrieved April 22, 2021)

[2] “QuickAlerts - Technical - Delay in Processing Form(s) 1040, 1040-X, and 1040-ES Payments Submitted via Modernized e-File,” IRS website, April 22, 2021

[3] “QuickAlerts - Technical - Delay in Processing Form(s) 1040, 1040-X, and 1040-ES Payments Submitted via Modernized e-File,” IRS website, April 22, 2021

[4] “QuickAlerts - Technical - Delay in Processing Form(s) 1040, 1040-X, and 1040-ES Payments Submitted via Modernized e-File,” IRS website, April 22, 2021