Watch Out For These IRS Notices This Summer

Watch Out For These IRS Notices This Summer

About 15 million individual taxpayers each year are reminded that taxes don’t end after April 15th. The IRS reached out to about 10% of taxpayers last year, usually in the form of an IRS letter or notice.

Information about the processing of a tax return or payments is usually what’s inside IRS notices but requiring action by taxpayers to resolve an issue and get back in good standing with the IRS is the majority of its content.

After most tax returns have been filed, you might encounter the following notices during the summer months:

1. Notices on Refund Hold/Offset

If you’re one of those taxpayers who file before the April deadline, you will be able to get a refund. However, your refund might end up getting frozen or offset because of an issue with the IRS. You return could be suspected by the IRS as fraudulent or there may be another issue that needs to be fixed such as filing an overdue tax return from a previous year.

If you have outstanding tax debt, refund offsets sometimes occur. To pay your non-tax obligations like overdue child support or past-due student loans, the IRS can also take your refund. To get the IRS to release the refund or prevent the same thing from happening next year, you’ll have to get to the root of the matter.

2. Notices on Past-due/Collection

When taxpayers file their tax returns, about 30 million of them ending up owing a balance and those who can’t pay with the return are about 4-5 million. If a payment arrangement wasn’t set p with the IRS, a series of notices will be sent to you from the IRS throughout the summer. The CP14 is the first notice that arrives in June while the other four notices arrive about 35 days apart. As soon as you make arrangements with the IRS for the balance you owe, the notice will then stop.

The IRS can move to collection tactics after the final warning notice if you ignore the notices. If you owe less than $50,000, you can get an extension to pay which is up to 120 days or a payment plan using the IRS online payment agreement tool at You will need to make arrangements with the IRS by directly contacting them if you owe more than $50,000 or have a hardship situation. Ignoring it is absolutely not a good option. It can result to tax liens and levies.

3. Underreporter Notices

To determine whether all income is being reported, the IRS is constantly reviewing returns. A program that matches up all tax returns with the tax information statements (Forms W02, 1099, etc.) is being used by the IRS. The IRS can send a notice if there is a mismatch called a CP2000. Missing items and discrepancies, propose additional tax, penalties, and interest are being shown in CP2000 notices.

CP2000 notices don’t ask about the return you just filed during the summer. The return you filed the year before is what they’ll be questioning you from. Your old tax records need to be brushed off if you receive this notice your discrepancies must be explained to the IRS. An average of over $1,600 of additional tax owed comes from CP2000s.

On top of the tax, a 20% accuracy penalty can also come from the notice. In your response to the IRS, you can disagree with this penalty if you can show that a reasonable attempt of reporting all of your income has been made by you.

Taxpayers must always keep in mind that each summer, they still need to deal with taxes. A lot of people had to provide more information to get their refund, address a balance owed from the IRS, or if income items on a return they filed over a year are missing, they must be able to explain. It’s dangerous to put off IRS notices although most people find it easy to do so. Nothing can stop the IRS from collecting back taxes or assessing additional taxes and penalties, not even missed deadlines.

You may want to consider meeting with a tax professional who regularly deals with the IRS as they can help resolve the matter or get the best outcome for you.

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