Jonathan Cunningham, CPA
Understanding Your IRS Notice
Updated: Nov 11, 2021
How to Read and Respond to IRS Notices
The dreaded IRS notice. Even if you never received one, you have certainly heard the stories about those envelopes arriving by regular mail, with the “Department of The Treasury, Internal Revenue Service” printed in the upper left corner. The notice in the inside may read CP2000, CP2501, CP2531, CP12, CP14, CP163, CP501, CP05, they go on and on.
Some of these notices are extremely serious and may be the last communication you receive before IRS starts aggressive collection actions. IRS can and will levy (remove) money from your bank accounts, require your employer to send a significant portion of your pay check to them instead of paying it to you, and may also put liens against your home or other assets. If you don’t respond in time you may literally find that your ATM card stops working and you are left without funds to pay your mortgage, car payments or even buy groceries.
The Good News
The good news is that you can avoid such a dire outcome by responding to your notice. Cunningham CPA can always negotiate a better payment plan than a default garnishment, and if your bank has been levied leaving you penniless, we will work to get it released. Read my post about IRS debt to learn more.
What ever you do, don’t ignore your notice. Sometimes the IRS can be slow but they never forget and once collection activity starts they are relentless.
What to Look For When Reading Your IRS Notice
When you read your notice, look very closely at the deadline for a response. Some notices are what are known as “30 day letters” meaning you have only 30 days to respond before your rights to dispute is limited. Other notices have 60, 90 (CP3219N) and in some cases may allow up to 120 days to respond. It is very important to read the letter closely, understand the timelines and determine the best course of action. Some notices may just request additional information or inform you of a change in status. Sometimes an IRS notice is good news. Check out this notice informing the tax payer that their request for penalty abatement was approved!
Look Up Your IRS Notice
Each IRS notice has a number and a corresponding publication that will tell you a bit more. A good place to start if you have questions after reading your IRS Notice is to look it up using the IRS link below. If you don’t have a notice and just want to try it and see how it works, open the link and search for IRS Notice “CP2000” or "CP3219a". CP2000 is notification of a Tax Return Review by Mail, and CP3219a is the notice of deficiency shown above.
A CP2000 is kind of like "audit light" and one of the most common notices. The IRS sends CP2000 when the information on your tax return is different from what the IRS has in its files – often a 1099 that didn’t make it into a return or some other omission of income. The CP2000 will propose certain changes to your return and the taxpayer can agree or dispute.
Here is the link to look up more information about your IRS notice:
Call Cunningham CPA in San Diego for Help With IRS Notices
Cunningham CPA helps San Diego tax payers who have received IRS notices. Call today for a free consultation. We can help you understand the options, respond to the IRS and help resolve the issue in the best way possible.
Helping people out of the stress and uncertainty of IRS problems is one of the most rewarding parts of my job. Call me today for your best possible tax outcome.