Posted by Fletcher Accounting and Tax Service Inc.

IRS Notices To Watch Out For This Summer

IRS Notices To Watch Out For This Summer

Taxes do not end after April 15 for about 15 million individual taxpayers each year. Last year, the IRS contacted about 10% of taxpayers. It usually comes in the means of either a letter or notification from the IRS.

Some IRS notifications only provide information about the processing of a statement or payment, but most notifications ask the taxpayer to resolve a problem and return to the IRS order.

In the summer, after most tax returns, you may encounter three warnings:

1. Refund Hold/Compensation Notices

Most taxpayers who file a return by the April deadline receive a refund. However, the refund could be frozen or compensated due to an IRS problem. The IRS may suspect that the return is fraudulent or another problem needs to be resolved, such as filing a tax return a year earlier.

A refund compensation sometimes occurs if you have an unpaid tax payable. The IRS can also use your refund for the payment of non-taxable obligations, such as overdue custody of a child or expiry of a student loan. In these situations, it is necessary to go to the root of the problem so that the IRS releases the refund or prevent this from happening again next year.

2. Past Dues/Expired Collection

About 30 million taxpayers owe a balance when they file tax returns. 4-5 million of them cannot afford to pay with the return. If you do not sign an IRS payment agreement, you will receive a series of IRS notices during the summer. The first arrives in June (CP14 notification), with the remaining four notice coming approximately 35 days apart. Notifications are interrupted when agreements with the IRS concerning the balance due are concluded.

If you ignore notifications, the IRS may continue to use billing tactics after the final warning (usually a letter 1058 or LT11, "final communication of intent to collect"). You can get a payment extension (up to 120 days) or a payment plan if you need less than $50,000 using the IRS online payment tool. If you are over $50,000 or have an awkward situation, you should contact the IRS directly to make arrangements. What is not a good option? Ignore. This can result in tax liens and privileges.

3. Under-reporter Notices

The IRS continually reviews the returns to see if all the income is recorded. The IRS has a program that combines all tax returns with tax return information (Forms W-2, 1099, etc.) filed with the IRS. In case of mismatch, the IRS can send a notification, called CP2000. The CP2000 warnings contain missing elements and discrepancies and offer additional taxes, penalties and interest.

During the summer, the CP2000 notifications do not dispute the statement you just sent, but I doubt the statement you made a year ago. If you receive this warning, you must delete the previous tax records and explain any discrepancies in the IRS. The CP2000 translates into an average of over $1,600 in additional taxes owed.

Also, the notification may result in a 20% accuracy penalty in addition to taxes. You cannot accept this fine in your response to the IRS if you can prove that you have made a reasonable effort to declare all of your income.

Unfortunately, filing a tax return is not always the only contact with the IRS during the year. If the federal tax agency detects errors in your return, leading to an assessment, it will send a CP14 notification for collection. This is not the moment to be afraid before taking the right steps to solve the problem.

If applicable, you will receive your "balance due" notice within four weeks of processing the return. This letter is the first IRS contact to collect unpaid taxes. If you ignore or stop paying what you owe, the IRS sends additional warnings and launches aggressive recovery actions, such as liens and bonds. Here are three steps to follow when you receive the notice of "balance due":

1. Review the details of the CP14 alert

The first thing to do when receiving the CP14 alert is why you received it. The notification includes the following elements:

  • The fiscal year for which taxes are due
  • Notification launch date
  • your social security number
  • IRS phone number
  • Amount of taxes due
  • Payments and loans.
  • penalties for taxes due
  • the final amount to be paid
  • Deadline for payment of the amount due
  • Note CP14 also includes information on payment options, penalties and interest

2. Determine if the IRS is correct

Before agreeing or disagreeing with CP14, make sure your statement contains errors that led to the determination of the tax liability. In case of error, you must pay the amount due during the payment period to avoid fines and additional interest.

If you do not find an error or you do not find an amount different from the one defined by the IRS, you can call the IRS at the number listed in the CP14 ad. An IRS representative will help you solve the problem.

3. Pay the amount due

You can make the payment specified in CP14 notice using IRS Direct Pay, a service that allows you to pay your taxes electronically directly from your savings or current account. Alternatively, you can pay by credit or debit card.

If it is not possible to pay all the fees owed, send a request to the IRS for up to an additional 120 days to pay or settle the payment agreement for the settlement agreement. A payment agreement allows you to pay the bill in fixed monthly installments. Get help from a tax-free professional before applying for a payment agreement to make sure you get the best tax debt solution for your situation.


Taxes do not reach millions of taxpayers every summer. Many need to provide more information to get a refund, manage an IRS balance, or explain the lost revenue records in a return filed a year ago. IRS alerts are easy to delay, but it's dangerous. The conditions do not prevent the IRS from collecting fees or assessing additional fees and penalties.

Fletcher Accounting and Tax Service Inc.
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