For many taxpayers, tax season ended when they e-filed or mailed their returns on or before Tax Day, April 18, 2022. But for others, this was just the beginning. As the IRS processes returns, the agency matches taxpayer data to forms, verifies payments received against balances, and checks for errors. The result? Mailboxes filled with notices and letters. This is why this time of year is often called tax correspondence season.
Opinions will vary depending on what the IRS alleges is missing or needs to be fixed. Here is a brief overview of some of the more popular notices and letters taxpayers may receive after filing a tax return.
The CP2000 notice informs taxpayers of a proposed tax change. Typically, a CP2000 appears when income reported by third-party sources, such as your financial institution or employer, does not match what you reported on your tax return. This may be due to a discrepancy in the numbers – you claimed $50 in interest when your Form 1099-INT brought in $500 – or an omission, such as the Form 1099-NEC the IRS received but you maybe forgotten.
It is important to read the CP2000 carefully as the manual explains what to do next.
- If you agree with the proposed tax changes, sign and return the notice. You do not need to modify your declaration if this is the only change. Note that the IRS requires the signatures of both spouses for joint filers.
- If you disagree with the proposed changes, indicate on the form that you disagree with any or all of the changes, and return the notice with an explanation and supporting documentation. At this point, the IRS will review your form and best-case scenario will agree with your response, or worse, send you another letter saying they disagree and asking for more information. .
- If you disagree with the proposed changes because the information reported by the third party is incorrect, contact the company or person responsible and request a correction or statement to substantiate the error. You will want to send a copy to the IRS with your response.
Pay attention to the due dates on the notice and the address or fax number to respond to – sending your response to the wrong place can cause delays.
The CP2000 is not an invoice. Once the issue is resolved, you may receive a payment request.
Notice CP3219A, or Statutory Notice of Deficiency, is sometimes called a 90-day letter. The IRS issues CP3219A if it determines that the information it received is different from what you reported on your tax return. CP3219A will not be the first time the IRS has contacted you about the proposed changes. Typically, you would have received a notice, like a CP2000, explaining the problem.
As with the CP2000, it is important to read your 3219A carefully as it explains what to do next.
- If you agree with the proposed changes, sign and return the notice.
- If you do not agree with the additional tax as proposed, you may respond directly to the Statutory Notice of Deficiency or you may sue the United States Tax Court before the due date shown on the notice. ‘notice. You have 90 days (or 150 days for those outside the country) from the date of the notice to file a petition with the Tax Court.
If you are responding directly to the Notice, it is important to understand that your response does not extend the time for filing a motion with the Tax Court. There are no extensions.
The IRS issues Notice CP3219N after the agency determines that it has not received your tax return and, therefore, has calculated the tax owing based on the information available to it. Processing is similar to CP3219A.
Another notice that ratepayers are seeing a lot in 2022 is CP14. The IRS sends a CP14 when the agency believes you owe money on unpaid taxes. This may be because you have not paid your bill or, as is often the case this year, you have paid the tax but the IRS has not yet processed the payment.
CP14 will specify how much you owe and what to do next.
- If you agree that you haven’t paid, you’ll want to pay the amount you owe before the due date. You can set up a payment plan if you cannot pay the full amount.
- If you disagree that you owe tax, you should contact the IRS. The notice will provide a toll-free number. In light of the difficulties in reaching the IRS by phone, I recommend putting something in writing to confirm payment – having a paper trail is always a good idea.
Letter 5071C or 6331C
The IRS issues letters 5071C or 6331C when you need to verify your identity and process your tax return.
The letters will explain the steps to follow.
- If you filed a return, the IRS needs more information to prove it was you. Typically, the letter will direct you to the page on the IRS website, Identity verification service, to verify your identity. You can also call the number on the letter. Whichever option you choose, you will need a copy of your letter, your tax return for the year in question and any supporting documents.
- If you haven’t filed a tax return, someone may have filed a fraudulent tax return using your name and identification number. You will still need to respond via the website or by phone.
Generally, you must respond within 30 days. If you don’t, the IRS won’t be able to process your return, which means your refund could be delayed or worse.
Tax experts are not the only ones to know the season of correspondence; scammers too. Be on the lookout for tax scams. If you receive a notice or letter and are unsure of its validity, you can always contact the IRS. Try calling 1-800-829-1040. You can also check your account on the IRS website or ask your tax professional to take a look.
My best advice
I’ve been saying for a long time that my best tax advice is to open your mail. It still rings true. If you receive a notice or letter from the IRS, don’t ignore it. If you’re too scared to open it on your own (trust me, I get it), or if you need help understanding your bill or review, ask for help.
This is a regular column from Kelly Phillips Erb, the Taxgirl. Erb offers commentary on the latest tax news, tax law and tax policy. Look for Erb’s column each week in Bloomberg Tax and follow her on Twitter at @taxgirl.