State tax officials have mailed out thousands of erroneous penalty and interest notices to Utahns, blaming a computer problem triggered by this year’s extended filing deadline.
Officials with the Utah State Tax Commission say the incorrect notices — meant to alert people that they owe the state money — went out to about 13,000 of the roughly 1.5 million Utahns who submitted income tax returns. Those affected by the problem might have been alarmed by billing statements that demanded hundreds or even thousands of dollars in penalties and interest.
The erroneous notices went out to some taxpayers who filed and paid their taxes between the usual deadline of April 15 and July 15, the adjusted deadline.
The tax commission’s computer system had trouble adjusting to this year’s deadline, which was delayed in light of the COVID-19 pandemic, explained Mike Lee, the commission’s taxpayer services division director. This year, the normal tax filing deadline was postponed to July 15, and people who paid the amount due by that date had until mid-October to file their returns, he said.
But some taxpayers who waited until the last minute to submit their returns were incorrectly flagged as late in the commission’s program and may have gotten the erroneous notices, Lee said. The problem cropped up even though the commission had tested its system extensively to make sure it was accounting for this year’s adjustments, he added.
“This is one that, despite all that testing,” he said, “we didn’t see.”
The tax commission had already received 2019 returns by the time the Utah Legislature changed the due date, leaving state officials with fewer options to accommodate the change, according to a commission news release.
Salt Lake City accountant Don Sorensen said his firm has handled about 10 of these incorrect notices so far. After noticing the problem, Sorensen said he contacted the tax commission, which readily acknowledged the technical mishap.
State officials have agreed to correct the error and return the money in the cases that Sorensen’s firm has brought to their attention, but he said a more comprehensive solution is necessary.
Because the notices contain alarming warnings about how the state can slap errant taxpayers with district court liens or garnish their wages, the accountant worries that some people will pay the incorrect amount without challenging it.
One of his clients sent the state $830 in response after receiving a notice of taxes due, he said. In actuality, that client didn’t owe the state anything. Another client got a notice demanding $2,783, even though the correct amount due was only $58, he said.
Other people might get a notice simply stating that their refund total had changed — that too could be incorrect as a result of the computer snafu, according to Sorensen.
Lee said the commission is already working to remedy the mistake. The system is currently up to date and reflects the correct amounts due by Utah taxpayers, he said, and the commission hasn’t mailed any erroneous notices since Nov. 13.
Any individuals or corporate taxpayers who overpaid because of the error will get a refund, which has already gone out in many cases, according to Lee. State tax officials are also preparing corrected notices, which should land in mailboxes by Dec. 15, he said.
People who think they might have received an incorrect notice should call the tax commission at 801-297-7703.