Tax season is stressful regardless of the year, but it’s become even more complicated due to the pandemic. Now, the Internal Revenue Service has only added to the confusion by sending a letter in error to hundreds of thousands of people telling them that they won’t receive their stimulus checks in order to pay off existing debts. Many people who received these letters didn’t even have any debts to begin with.
At least 109,000 people received a “Notice CP21C” letter from the IRS stating that the organization would be using their Economic Impact Payment (i.e. their stimulus check) towards existing debt. The letter read, “We applied a credit to your 2007 tax account due to new legislation. We used (offset) all or part of your economic stimulus payment to pay your federal tax as the law allows. As a result, you don’t owe us any money, nor are you due a refund.”
Now, the IRS says that the news was sent by accident. Its FAQ on stimulus checks now reads, “This notice is not accurate for anyone who received it. Since no payment was issued, no offsets occurred. We apologize for the confusion this may have caused. You can disregard the notice.”
Its Notice CP21C messages were originally meant to be for people whose 2019 tax returns weren’t processed in time for the department to mail a stimulus check by the end of 2020. However, those who might have this issue can still claim a Recovery Rebate Credit to get their first two full stimulus payments. Otherwise, don’t worry about the notice.
Unfortunately, the IRS has not individually alerted people who received the misstated letter to disregard it. This has led to understandable confusion and frustration as people have tried to contact the department to figure out what debts they owed and what they were supposed to do about it. The best we can all do now is spread the word!