Delinquency Control program will reduce the amount of notices sent to business entities August 2020 Tax News

Starting September 2020, the Delinquency Control program is changing. This program will now only issue a Request for Tax Return to business entities who fail to file tax returns. This will reduce the amount of time a business entity has to respond by 30 days before we take further action. This change will begin with business entities such as corporations, limited partnerships, limited liability companies, and Real Estate Mortgage Investment Conduit (REMICs) who have not yet filed a 2017 return.

Every year we contact both individual taxpayers as well as business entities regarding missing returns. When we contact a business entity due to a missing return, the notification is sent through one of two programs:

  • Filing Enforcement (FE)
  • Delinquency Control (DLC)

After receiving income information reports:

  • The FE program identifies business entities who have not filed tax returns.
  • We issue a Demand For Tax Return notice advising the business entity that we did not receive a tax return from them by the extended due date. This notice allows 30 days for a response.
  • If we do not receive a timely response or determine the taxpayer may still have a filing requirement, we mail a Notice of Proposed Assessment to the business entity based on the income information reports.

Similarly, our internal accounting system identifies business entities who have not filed tax returns by the extended due date. As mentioned above, we call this the DLC program and when failure to file, we will notify the business entity. However, unlike the FE program, historically the current DLC program generated two notices:

  • A Request For Tax Return, which if not responded to within 30 days
  • It is followed by a Demand for Tax Return

This process allowed business entities up to 60 days to respond. Corporations, limited liability companies, and partnerships that fail to respond to the Demand for Tax Return notice are referred to Collections for resolution. If we do not receive a tax return or the business entity does not response, we may suspend the business entity.