A disturbing notice from the IRS, coded “CP21C,” informed recipients that the agency was offsetting their stimulus payments because of a possible federal debt they owed — from 14 years ago, the Washington Post reported. The letters were sent in January to more than 109,000 people, according to the Taxpayer Advocate Service. It was a mistake — yet another glitch in the stimulus-relief distribution efforts. “It’s very disheartening,” National Taxpayer Advocate Erin M. Collins said in an interview. “I know that the IRS has its struggles, and we are all trying to be patient because of the pandemic. But at the same time, these are things that just shouldn’t be happening.” This error stems from the IRS’s implementation of two sets of stimulus payments. The Coronavirus Aid, Relief and Economic Security Act, or Cares Act, which passed in the spring, authorized payments of up to $1,200 for individuals and $2,400 for couples filing jointly, based on 2018 or 2019 federal returns. The Cares Act required the IRS to deliver the first round of stimulus payments by Dec. 31. The more recent Coronavirus Response and Relief Supplemental Appropriations Act, passed at the end of December, called for additional stimulus payments of up to $600 per adult ($1,200 for couples). The payments were an advance against a tax credit referred to on the 2020 1040 Form as a “Recovery Rebate Credit.” The advanced payments were eligible to be paid in two rounds during 2020 and early 2021. Congress set deadlines for the IRS to get the payments out. Facing a backlog of 2019 returns, the IRS sent out the CP21C notice to inform people they would have to wait until they filed their 2020 return to receive the relief, because the agency failed to meet the Dec. 31 deadline. The erroneous notices are another example of the consequences of the agency’s antiquated technology, Collins said in a blog post.
