Understanding Some Frequent Letters and Notices From the IRS

For many taxpayers, tax season ended when they e-filed or popped their returns into the mail on or before Tax Day, April 18, 2022. But for others, it was just the beginning. As the IRS processes returns, the agency matches taxpayer data to forms, checks payments received against balances, and checks for mistakes. The result? Mailboxes filled with notices and letters. That’s why this time of year is often referred to as tax correspondence season.

The notices will vary depending on what the IRS alleges is missing or needs to be resolved. Here’s a quick look at some of the most popular notices and letters that taxpayers might receive after filing a tax return.

Notice CP2000

Notice CP2000 advises taxpayers of a proposed change in tax. Typically, a CP2000 shows up when income reported from third-party sources, like your financial institution or employer, does not match what you entered on your tax return. This could be because of a difference in numbers—you claimed $50 in interest while your Form 1099-INT reported $500—or an omission, like the Form 1099-NEC that the IRS received but which you might have forgotten about.

It’s important to read the CP2000 carefully because the notice explains what to do next.

  • If you agree with the proposed tax changes, sign and return the notice. You do not need to amend your return if that’s the only change. Note that the IRS requires both spouses’ signatures for joint filers.
  • If you don’t agree with the proposed changes, indicate on the form that you disagree with some or all of the changes, and return the notice with an explanation and supporting documentation. At that point, the IRS will review your form and best case, agree with your answer, or less great, send you another letter stating they do not agree and asking for more information.
  • If you disagree with the proposed changes because the information reported by the third party is wrong, reach out to the responsible business or person and ask for a correction or a statement to support why it’s wrong. You’ll want to send the IRS a copy with your response.

Pay attention to the due dates on the notice and the address or fax number to respond to—sending your answer to the wrong place can cause delays.

The CP2000 is not a bill. Once the issue is resolved, you may receive a demand for payment.

Notice CP3219A

Notice CP3219A, or a Statutory Notice of Deficiency, is sometimes called a 90-day letter. The IRS issues CP3219A if it determines that the information they received is different from what you reported on your tax return. The CP3219A won’t be the first time the IRS has reached out to you about the proposed changes. Typically, you would have received a notice—like a CP2000—explaining the issue.

As with the CP2000, it’s important to read your 3219A carefully because it spells out what to do next.

  • If you agree with the proposed changes, sign and return the notice.
  • If you disagree with the additional tax as proposed, you can respond to the Statutory Notice of Deficiency directly, or you can petition the US Tax Court by the due date shown on the notice. You have 90 days—or 150 days for those out of the country—from the date of the notice to file a petition with the Tax Court.

If you respond to the notice directly, it’s critical to understand that your response does not extend the deadline to file a petition with the Tax Court. There are no extensions.

If you don’t respond to the IRS or file a petition, the IRS will assess the tax and send you a bill.

Notice CP3219N

The IRS issues Notice CP3219N after the agency determines that it has not received your tax return and, as a result, has calculated the tax due based on the information that they have available. The treatment is similar to the CP3219A.

Notice CP14

Another notice that taxpayers are seeing a lot of in 2022 is the CP14. The IRS sends out a CP14 when the agency believes you owe money on unpaid taxes. This could be because you didn’t pay your bill or—as is often the case this year—that you paid the tax, but the IRS has not yet processed the payment.

The CP14 will spell out how much you owe and what to do next.

  • If you agree that you didn’t pay, you’ll want to pay the amount you owe by the due date. You can set up a payment plan if you can’t pay the amount in full.
  • If you disagree that you owe tax, you should contact the IRS. The notice will provide a toll-free number. In light of difficulties 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 what steps you need to take.

  • If you filed a return, the IRS needs more information to prove that it was really you. Typically, the letter will direct you to page on the IRS website, Identity Verification Service, to verify your identity. You can also call the number on the letter. No matter which option you choose, you’ll need a copy of your letter, your tax return for the year in question, and any supporting documentation.
  • If you didn’t file a tax return, someone might have filed a fraudulent tax return using your name and identification number. You’ll still need to respond via the website or phone.

Typically, you need to 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.

Be Careful

Tax pros aren’t the only folks who know about correspondence season; so do scammers. Be on the lookout for tax scams. If you receive a notice or letter and you’re not sure whether it’s valid, you can always reach out to the IRS—try calling 1-800-829-1040. You can also check your account on the IRS website or ask your tax professional to give it a look.

My Best Advice

I’ve long said that my best tax advice is to open your mail. That 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 notice, ask for help.

This is a regular column from Kelly Phillips Erb, the Taxgirl. Erb offers commentary on the latest in tax news, tax law, and tax policy. Look for Erb’s column every week from Bloomberg Tax and follow her on Twitter at @taxgirl.

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