The Taxonomy of IRS letters

Science has documented and named something like 900,000 different insect species. Interestingly, most authorities agree that the number of insect species that have not been named far exceeds the number that have been named. We can only estimate what this number might be: anywhere between 2 million and 30 million.

And this is where I draw a strange comparison between insects and IRS correspondence. It won’t seem all that strange if you have ever received IRS mail over an extended period of time. The comparison certainly isn’t that tenuous from the perspective of a tax attorney who sees an endless stream of every type of IRS correspondence show up in the office. Based on a recent TIGTA audit report, the IRS sent out over 141 million notices and 37 million letters during fiscal year 2014. That’s a lot of mail, but knowing how many people that they have to reach, these numbers seem reasonable. However, the variety of IRS letters and notices (like the variety of bug species) is apparently too large for the IRS to wrap its brain around. There are 2,749 types of letters and 195 types of notices currently in circulation.

TIGTA conducted this audit in order to follow up on a project that was initiated years ago wherein the IRS was supposed to remove social security numbers from forms, letters, and notices (due to identity theft concerns) except in cases where the SSN is absolutely necessary. The project was supposed to be completed in 2009, but the IRS put it off due to budget cuts and the need to focus efforts elsewhere. TIGTA found that the IRS has fixed only 2 percent of its letters and 48 percent of notices. Not only does the IRS not have a plan for completing this project and removing social security numbers, it does not even have a process or procedure for identifying correspondence with unnecessary SSNs. IRS management is apparently overwhelmed by the variety of correspondence; they are on record saying that compiling a list of all correspondence is more costly an endeavor than it appears. So what is the best way to describe the relationship between IRS correspondence and the world’s insect population? They’re everywhere and we don’t even know what most of them are.

What’s the Point of IRS Letter 2645C?

Are you wondering what does IRS letter 2645c mean? 2645C is my all-time favorite and most ambiguous IRS letter. The Internal Revenue Manual refers to them as “interim letters” (IRM 4.19.23), which is a nice label given to a letter that is simply saying the IRS has received something from the taxpayer but has not acted on it yet.  And when I say the IRS has received “something,” I literally mean anything — it is up to the taxpayer to figure out what that might be based on the receipt date in the letter that is often inaccurate.  The IRS inquiry letter does give a few options as if to jog one’s memory:

  • Correspondence
  • Telephone inquiry
  • Payment
  • Form
  • Response to our inquiry or notice
  • Penalty abatement request
  • Installment agreement
  • Other

Yes, it says “other.”  This list is taken directly from the form letter 2645C.  It goes on to say that the IRS hasn’t resolved the matter because they haven’t completed all the processing necessary for a complete response.  This letter is completely baffling to me, and I am always wary of those times I am told that the IRS hasn’t “finished processing” something.  What that usually means is they haven’t even looked at it.  If they had looked at it, then would it really be that difficult to specify if this something is a payment, a phone call, penalty abatement, or “other”?

Probably the most perplexing option in the list above is “payment” because what kind of processing is really necessary when a payment is received?  Yes, a determination needs to be made as to where to apply the payment (what tax year or period), but what else?  It seems to me that the processing of a payment is the one thing that the IRS would not put off for later.

Next this letter states that the IRS will contact the taxpayer within a specified time frame (usually 45 days).  The letter ends with a friendly reminder about how to make installment payments, including how to annotate your check.  In other words, we’re not sure what you sent us, and we won’t get to it for 45 days, but in the meantime be sure you don’t miss a payment.  Sincerely, IRS.