Significant IRS Letter Confusion

I’ve written about the problems inherent in the IRS automated letter system. For several months we’ve been trying to respond to letters that make absolutely no sense.

Please understand that part of the $80B funding increase of The Inflation Reduction Act was used to beef up their AI Systems, So now we receive letters on IRS problems devoid of logic, syntax, or grammar because no cognizant human is writing the correspondence.

But now our hard-working civil servants at the Service have created an even worse letter fiasco. The newest nightmare is simply dubbed Letter 38.

If you’ll remember, the IRS decided to not send out automated collection letters during the pandemic. This collection process is for anyone who’s late on a payment or a tax return. The letters enforce the Failure to File and Failure to Pay Penalties and tack interest onto the collection process for payroll and income tax returns.

Recently the IRS announced that it would again begin the automated collection process by sending out the new and improved Letter 38. The problem is that the new letters don’t begin to tell you the majority of the details necessary to cure a deficiency.

They’ll say something like “941 – 1st Quarter 2020” and they’ll have a balance due. Okay. Great. But what does that actually tell us?

Is it a Failure to File or Failure to Pay Issue? If it was Failure to Pay, then was it the full amount, or one of the deposits? If it was one of the deposits, then which one and how much?

The old letters told us exactly what was wrong. The new ones do nothing but create more work.

This means that if you can’t figure it out on your own, we’ll need to get an IRS transcript that may solve the problem. Sometimes that needs to be looked at in addition to some internal accounting records, because many of the transcripts from the Service read like Chinese Hieroglyphics.

Let me leave you with this.

The whole point of using AI at the Service was to decrease the workload of their agents. This new process has done nothing but increase it.

Now we need to call the 800 number, get an agent on the phone, and have them forward documentation. If you’ve ever called the Service, you know that this can take forever.

One of the secrets to getting an agent on the phone is to call them at 8:30 am CST when the phone lines open up. At that point your wait won’t be two hours.

Hopefully a call to the IRS will actually solve the problem and a payment can be tendered. But what happens if there’s no problem on our end and the Service made a mistake?

Then we’ll need to write a letter. A phone call won’t fix anything. And if the agent opening the mail at the Service has any idea what they’re doing, then maybe the issue will get resolved.

If not we’ll get a declination response from the Service and need to send the issue to the Taxpayer Advocate’s Office. At that point, hopefully it will get resolved in six months or so.

If this has happened to you, I’m sorry. There isn’t anything else that we can do to solve the problem except to wade through the ridiculousness. Believe it or not, I don’t have an “S” on my chest.

And it all comes down to an IRS Letter that doesn’t actually tell you what they think is wrong. I’m so excited about AI taking over the world.

“Curiouser and Curiouser.” Down the Rabbit Hole we go…

We’re all going to get through this. Let’s get through it together.

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Sincerely yours,

Chris Amundson


Accounting Solutions Ltd.



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