Understanding Your IRS Notice or Letter

By | September 29, 2016
(Last Updated On: September 29, 2016)

Understanding Your IRS Notice or Letter

Your notice or letter will explain the reason for the contact and give you instructions on how to handle the issue.

Why was I notified by the IRS?

The IRS sends notices and letters for the following reasons:

  • You have a balance due.
  • You are due a larger or smaller refund.
  • IRS have a question about your tax return.
  • IRS need to verify your identity.
  • IRS need additional information.
  • IRS changed your return.
  • IRS need to notify you of delays in processing your return.

Next Steps

Each notice or letter contains a lot of valuable information, so it’s very important that you read it carefully. If IRS changed your tax return, compare the information IRS provided in the notice or letter with the information in your original return.

If your notice or letter requires a response by a specific date, there are 2 main reasons you’ll want to comply:

  • to minimize additional interest and penalty charges.
  • to preserve your appeal rights if you don’t agree.

Pay as much as you can, even if you can’t pay the full amount you owe. You can pay online or apply for an Online Payment Agreement or Offer in Compromise. Visit our payments page for more information.

Keep a copy of your notice or letter
It’s important to keep a copy of all notices or letters with your tax records. You may need these documents at a later date.

Contact IRS
IRS provide our contact phone number on the top right-hand corner of the notice or letter. Typically, you only need to contact IRS if you don’t agree with the information, if we requested additional information, or if you have a balance due. You can also write to IRS  at the address in the notice or letter. If you write, allow at least 30 days for our response.

The location of the notice or letter number

You can find the notice (CP) or letter (LTR) number on either the top or the bottom right-hand corner of your correspondence.

When the notice or letter looks suspicious

Please visit our Report Phishing page if you receive a notice or letter that looks suspicious and was designed to appear as though it came from the IRS. You can also call 1-800-829-1040. IRS never ask taxpayers for personal information via e-mail or social media.

Topic 652 – Notice of Underreported Income – CP-2000

The IRS compares the information reported by employers, banks, businesses, and other payers on income documents like the Forms W-2, 1098, 1099, etc., with the income, credits, and deductions you report on your income tax return. The Automated Underreporter (AUR) function sends out a Notice CP-2000 if you did not report income reported to the IRS by a payer or if it appears that payments, credits and/or deductions are overstated. The CP-2000 is not a bill. It is a proposal to adjust your income, payments, credits, and/or deductions. This may result in additional tax owed or a refund of taxes paid.

The first page of the notice provides a summary of proposed changes to your tax, the steps you should take to respond, and a phone number to call for assistance. In addition, the notice:

  • Shows the amounts you reported on your original or amended return
  • Shows the amounts reported to the IRS by the payer
  • Shows the IRS proposed changes to the tax, credits, and/or payments
  • Shows the payer’s name, ID number, the type of document issued (W-2, 1098, 1099), and the tax identification number of the person to whom the document was issued
  • Based on payer documentation, proposes either an increase or decrease to your tax liability, and
  • Includes a response form, payment voucher, and an envelope.

Review this information carefully to verify its accuracy and so you know exactly how you should respond. On the response form, you should indicate whether you agree with all the changes, agree with some of the changes, or do not agree with any of the changes the IRS is proposing. The response form also allows you to authorize someone other than yourself to contact the IRS concerning the notice, and the notice provides payment options.

Responding to the notice:

  • If you agree with the proposed adjustments, complete and sign the response form, and return it in the enclosed envelope. The proposed adjustments will generally show interest calculated 30 days from the date on the notice; certain penalties may also apply but may not be shown. You may pay the amount you owe within 30 days from the date of notice, and making that payment will stop additional interest from accruing. If you make a partial payment, or you send the signed consent without payment, the IRS will bill you for the amount due plus additional penalties and/or interest charges. If making a payment, please use the enclosed payment voucher to ensure proper application of your payment. If you are unable to pay, see Topic 202 for more information about tax payment options, or you may request a payment arrangement to pay the amount you owe by enclosingForm 9465 (PDF), Installment Agreement Request, with your response. You will be contacted later with payment information. If your request for an installment agreement is approved, you may be charged a fee.
  • If you do not agree with any changes or with some of the changes, do not sign the notice. Instead, explain in a separate signed statement why you do not agree, attach the statement and supporting documentation for consideration to the response form, and submit the response form and attachment to the IRS. Include your phone number with area code and the best time of day to call.

Do not file an amended return ( Form 1040X (PDF)) for the tax year shown in the upper right hand corner of page 1. The IRS will make corrections for you after IRS receive your response. If the same or other errors occurred in any other tax years, you may wish to file an amended return for those years in order to prevent or reduce the accrual of penalties. See Topic 308 for more information about amended returns.

You must respond within 30 days of the date of the notice or 60 days if you live outside the United States. Send your response, a copy of the notice you received, and any other necessary documents with the enclosed envelope. If you have lost the envelope or it was not enclosed, please send your response to the address listed on the first page of the response form. If you are making a payment, use the provided payment voucher to ensure correct application to your account.

If there is a proposed balance due and IRS do not hear from you within the 30 or 60-day period, AUR will issue a statutory notice of deficiency and additional interest and penalties will be charged as appropriate.

Source https://www.irs.gov


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