IRS Alert: Programming Issue Triggers Incorrect CP161 Notices for Some 1041 Trust Returns

The IRS is erroneously issuing CP161 balance due notices for certain 2024 Form 1041 trust returns. These notices incorrectly assess estimated tax penalties in cases where no payments were required—such as trusts that elected to be treated as estates or those with no prior-year tax liability.

This issue stems from a recent programming error. According to the National Association of Tax Professionals, The IRS has acknowledged the problem and is working to automatically correct affected accounts within approximately one month. No action is needed at this time unless the penalties are not reversed in that timeframe.

If you’ve received one of these notices, do not make a payment. Please contact your Weiss Tax professional first for additional guidance.