What to Do If You Receive a Letter From the IRS

Okay, hands up if your heart skips a beat when you see a letter from the IRS in your mailbox. Yeah, us too. Deep breaths! Let’s unravel this together, step by step, and by the end of this post, I promise you’ll feel ready to open, decipher, and deal with whatever that letter says.

Unpacking the Letter

The suspense can be the worst part. So, don’t let that envelope sit on your kitchen counter any longer. Tear it open, and let’s see what we’re dealing with. Make sure the letter is really meant for you, as there can sometimes be mix-ups!

Make It Make Sense

Now, the IRS isn’t exactly known for being straightforward and easy to understand. It’s almost like they speak another language. But don’t sweat it, we’ve got you covered. Here’s a quick breakdown:

Balance Due Notices: This is basically the IRS’s polite way of saying, “You owe us money.”

Refund and Overpayment Notices: The best kind of notice. It’s the IRS’s way of admitting they owe you. Pop the confetti!

Audit Notices: Less scary than it sounds, I promise – just think of it as a thorough check up for your finances.

Identity Verification: This is just a routine process to make sure you are who you say you are.

How to Respond

If you have any questions, don’t hesitate to reach out to them! There’s no harm in seeking clarity. The letter will have information on how to go about getting in touch. But before you do, make sure you have everything you might need at your fingertips: your previous tax returns, any relevant documents, and probably a coffee in hand (for your own sanity). If things get complicated, don’t hesitate to pull in a pro. IRS Shield stands poised to help guide, represent, and defend.

The Fine Print

If an unexpected penalty does land on your doorstep, we understand it can feel like a punch in the gut. But more often than not, there are ways to address, reduce, or even eliminate them. Here’s what you should do:

Understand the Why: Before jumping to conclusions, get to the root of why the penalty was imposed. Was it a late filing, an overlooked amount, or something else? Knowing the reason can guide your next steps.

Seek Solutions: Penalties might sound rigid, but the IRS does provide avenues for abatement or reduction, especially if you have a reasonable cause or it’s your first-time facing such a penalty.

Act Immediately: This is of the utmost importance. Responding quickly can prevent additional penalties and interest from accruing and can show the IRS that you’re proactive about resolving the issue.

Know Your Rights as a Taxpayer

Yes, it’s a thing! You’re not just a name on a form; you’re a human with rights! You deserve to know what’s going on, to raise objections when things seem off, and to appeal if you feel the need. Stand tall – you’re not powerless in this dance. And if you start to feel like you’re tripping over your own feet, you can always turn to IRS Shield.

Why IRS Shield?

Because we’re not just about helping you understand tax jargon, we’re also prepared to stand as your advocate. Think of us as your personal tax guardian, ensuring you’re not just heard but understood. With a blend of expertise, dedication, and genuine care, IRS Shield makes sure your rights as a taxpayer are always front and center.

And with IRS Shield, you’ve got more than just rights – you’ve got resources. Stand tall, stand informed, and always know you’re shielded.

Looking Ahead

Here are just a few quick tips for handling any future interactions with the IRS:

1. Keep your records neat. They’re the breadcrumbs you’ll follow if you ever need to retrace your steps.

2. Embrace technology. Digital tax filing is a game-changer.

3. And always—ALWAYS—trust your gut when something feels off. The real IRS isn’t in the business of threats.

And… Exhale!

Look at you, making it to the end, ready to take on the world – or at least the IRS! Remember, every letter is just a conversation waiting to happen. With your newfound knowledge, some due diligence, and the trusty shield of, well, IRS Shield by your side, you’re not just prepared, you’re empowered.

So, as you go about, whether you’re facing the IRS or just the everyday challenges of life, take this confidence with you. Know that you’ve got the resources, the support, and the resilience to handle whatever comes your way. Stay awesome, and here’s to making sense of whatever the IRS throws at you!

Common Notices the IRS Sends Out

Most people prefer not to get mail from the IRS. But when you do, it’s important to understand what the letter or notice is about and what action, if any, you need to take. Let’s break down some of the most common notices the IRS sends out.

1. CP2000 Notice: Underreported Income

Think you’ve told the IRS about all your earnings? The CP2000 notice suggests otherwise. It means there’s a mismatch between the income you reported and what they have on record.

What to Do: Check your documents against the notice. If you spot an error, prepare your proofs and get in touch with the IRS. (There will generally be directions on how to do this on the notice itself.)

2. CP11 Notice: Changes to Tax Return & Amount Owed

Thought you had your tax return sorted? The CP11 notice says the IRS found some hiccups, and you owe them money.

What to Do: Take a closer look at the adjustments. If you don’t agree, make sure you’ve got evidence to back your stance, and follow the directions on the notice to dispute.

3. CP12 Notice: Overpayment and Refund

Who doesn’t love a pleasant surprise? The CP12 notice lets you know that you’ve overpaid your taxes and are due a refund, or your original refund amount has changed.

What to Do: Relax, mostly. If the refund seems off, give them a call. (The contact information should be listed on the notice. If not, look here for how to get in touch with the IRS.)

4. CP14: Unpaid Taxes

The message of CP14 is clear: you owe some taxes. It’s the opening salvo in a series of reminders.

What to Do: Take action quickly. If you can’t pay everything at once, you might be eligible for a payment plan.

5. Letter 531: Notice of Deficiency

Letter 531 might come off a bit prim and proper. It’s the IRS’s way of saying they’ve got some numbers they want to hash out with you, and if you don’t chime in, they’ll just go ahead and make the decision for you.

What to Do: If your gut screams “mistake,” it might be time to consult a tax professional.

6. CP90: Final Notice of Intent to Levy

The CP90 is basically the IRS waving a pretty big flag in your face. They’re pointing at an amount you owe them and warning that they’re pretty close to helping themselves to some of your assets.

What to Do: No time to dawdle here. Pick up the phone, dial the IRS, and see how you can get things squared away.

7. CP501: Balance Due

With the CP501, the IRS is just giving you a light tap on the shoulder. They’ve noticed a little something you might’ve forgotten to pay.

What to Do: Best to get on it pronto. Settle the amount and dodge any extra headaches down the road.

8. CP503: Second Reminder of Balance Due

The CP503 is the IRS, eyebrows raised, going, “Remember the previous memo? That balance? Still there.”

What to Do: Clock’s ticking, my friend. Best to pay up and keep them from sending an even more “exciting” letter.

9. CP504: Urgent Notice – Intent to Levy

The CP504 isn’t messing around. The IRS is upping the ante, warning of potential levies on certain assets if you don’t settle up.

What to Do: Procrastination isn’t your friend here. If you’re scratching your head over this, it might be a good idea to get a tax whiz involved.

10. CP91: Intent to Levy Social Security

The CP91 is the IRS sounding the alarms. They’re looking over at your Social Security benefits as a way to settle those unpaid taxes.

What to Do: Drop everything and prioritize this. Those benefits are your future, so make sure you address this notice urgently.

Deciphering the Lingo

The IRS, like many governmental bodies, has a love for codes and formal language. Sometimes, these notices might seem like they’re written in a different dialect of English. However, beneath the formal jargon lies simple, direct messages. Here’s a quick translation guide:

Adjustments: Changes made by the IRS to your tax return.

Levy: IRS’s legal seizure of property to satisfy a debt.

Assessment: The official recording of a taxpayer’s liability.

Lien: A legal claim against your property when you neglect or fail to pay a tax debt.

Installment Agreement: A payment plan set up to pay off your tax debt over time.

Statutory Notice of Deficiency: This notice gives you a deadline to either agree with the IRS’s assessment or challenge them in court.

Refund Offset: When an outstanding debt causes the IRS to reduce your federal tax refund.

Underreporter Inquiry: When the IRS thinks you didn’t report all of your income.

By understanding these terms and their translations, you’ll be better equipped to decode any IRS notice you receive.

Looking for Expert Guidance?

IRS Shield can provide the expertise you need. Our team of tax professionals is here to guide you through addressing any IRS notices. We understand that each notice is unique, and we’ll ensure you take the right steps for your situation. Your peace of mind is our priority. Don’t navigate this alone—let IRS Shield be your trusted partner.

Notice: Conclusion Ahead

Receiving an IRS notice can be scary, but with clarity comes understanding. By familiarizing yourself with the common notices outlined here and following the recommended courses of action, you can navigate these notices with confidence.

Remember, every notice is an opportunity for resolution, and you’re never alone in the process. With resources like IRS Shield, you have expert support just a call away. Knowledge is power, and with the right information at your fingertips, even the most complex tax issues become manageable.

CP12 Notice: Refund of Overpaid Taxes

While most people fear receiving mail from the IRS, the CP12 notice is one that you probably shouldn’t fear! This notice means that you can expect a check from the Federal Government in your mailbox in the next couple of weeks (or an adjustment to your original refund amount).

That’s right – while a CP12 notice does mean there was a math error on your return, this error likely resulted in the IRS owing you money.

Keep reading to learn how the CP12 notice works and what you should do if you get one. (If you have questions, IRS Shield is always here to help.)

What is a CP12 Notice?

A CP12 notice is one of the few types of IRS notices that you shouldn’t be upset about seeing in your mailbox. This notice informs you that the IRS has automatically adjusted one or more errors on your tax return (generally in your favor). As a result, you may be receiving a larger tax refund or a refund due to overpayment of your initial taxes.

In short, a CP12 notice generally means that you’ll be receiving a check in the mail from the IRS within 4 to 6 weeks!

What is on a CP12 Notice?

A CP12 notice is usually straight forward and provides you with the information you need to know about why your tax return is being changed and how much money you can expect to receive from the IRS.

The CP12 notice may include the following:

• Summary – includes the adjusted refund you’ll be receiving, a high-level calculation of that summary, and the forms and areas of those forms that have been automatically adjusted.
• What you need to do – instructions on the next steps that you’ll need to take
• Changes to your tax return – a detailed listing of all the changes made to your tax return, including lines that were changed, why they were changed, and how the changes impacted your overall calculations.

In addition to the information listed above, your tax return will also include general information like your social security number, the tax year being impacted, and the notice date.

Will I Receive a Refund Check if I get a CP12 Notice?

In most cases, you will receive a refund check from the IRS for the amount of the adjusted refund that has been listed on the CP12. However, there are two cases where you will not receive a refund check:

• You have outstanding tax debts – If you owe the IRS taxes from a previous tax year, then the IRS will deduct those taxes from the refund amount.
• You disagree with the changes – If you dispute the changes, the IRS will hold off on sending the check until the dispute has been resolved.

What Should I Do if I Receive a CP12 Notice?

If you receive a CP12 notice, the first thing to do is to review the notice in its entirety and ensure that you agree with all of the changes made.

If you agree with the changes, you don’t need to do anything else! You should receive a refund check within 4 to 6 weeks and should keep a copy of the notice for your records.

What Should I Do if I Disagree with a CP12 Notice?

If you disagree with the changes identified on the CP12 notice, you have 60 days from the notice date to notify the IRS. Contacting the IRS about a disagreement will cause them to automatically reverse the change and no longer send a refund check.

You don’t need to provide a justification for the disagreement; however, if the IRS disagrees with your disagreement, then they may audit your account. Therefore, it’s in your best interest to provide supporting documents if you disagree with a CP12 notice.

Your CP12 notice should include information on how to contact the IRS if you do disagree with the document. It’s always best to communicate in writing so you have documentation of what you sent.

What if I Ignore a CP12 Notice?

A CP12 notice is one of the few IRS notices that you can ignore without penalty. If you don’t respond to the notice, then the IRS will send you a refund check in the mail regardless.

How is a CP12 Notice Different from a CP11 Notice?

A CP12 notice is the exact opposite of a CP11 notice. Both indicate that the IRS has automatically corrected an error on your tax form. However, a CP12 notice generally means that you’ll be getting money back from the IRS, while a CP11 notice means that you owe the IRS additional money.

How to Prevent Future Errors on Your Tax Return

It’s always in your best interest to file your tax return accurately. Receiving a CP12 Notice means that you made a mistake on your tax return. While it worked out in your favor this time, the IRS could easily adjust a non-favorable error in the future (or miss an error completely), and you could end up missing out on additional money or overpaying the IRS.

In order to avoid math errors on your federal tax return, it’s best to use an online tax filing software that does all of the calculations and checks for you.

When to Get Tax Help

If you’re disputing a CP12 notice, the last thing you want is to have the IRS audit you. Therefore, if you do plan to dispute the notice, it’s in your best interest to consult a tax professional to ensure you’re providing all the documentation needed to support your dispute.

At IRS Shield, we’ve got your back! Our team of tax professionals can help answer any questions you may have about your CP12 notice and even work with the IRS on your behalf. Sign up to become a member today!

What to Do if the IRS Contacts You (and why they do)

Everyone dreads being contacted by the IRS, but few think of what the right steps to take are if they do reach out.

How do you know if the information the IRS has is accurate? What if it’s not? How do you know if it’s actually the IRS contacting you?

There is no need to panic. This post will teach you what to do if the IRS contacts you.

What to Do If the IRS Contacts You

Getting contacted by the IRS can be frightening. They typically contact taxpayers by sending a paper notice via the mail. If you do receive a notice, follow these simple steps:

• Don’t ignore it – receiving a notice from the IRS typically requires some form of action. If there is a response from you needed by a specific date, make sure to comply to minimize additional interest and penalty charges.
• Read the notice in its entirety – make sure to read the entire notice and that you agree with the information. If you don’t agree, respond as directed in the notice.
• Dispute or pay – if you disagree with the notice, you can dispute it. There are usually instructions on the notice on how to do so. If you do agree with the notice, then you should pay what you owe or work out a payment plan with the IRS.

If you’re having trouble understanding what an IRS notice means, you can search the IRS website based on the notice number for more information.

What to do If You Disagree with an IRS Notice

The IRS does make mistakes and can send out notices when you don’t actually owe any money. If you think the IRS has made a mistake by sending you a notice or an error in calculating what you owe, then you do have the option to dispute a notice.

Disputing a notice can be a difficult and lengthy process. IRS Shield offers consultation with qualified tax professionals to help determine the best solution for you. They’ll even work with the IRS directly on your behalf to achieve a resolution.

How to Respond to an IRS Notice

It isn’t always clear how to respond to an IRS notice. In some instances, you may need to send additional documentation, while other instances may require you to pay the IRS money, and in some cases, they may not even need a response at all.

If you agree with the information on the notice, make sure you understand what the IRS expects as a response. If they are asking for additional documentation, make sure to collect all the documentation required before responding.

Avoiding Tax Scams

There are several scams of individuals impersonating the IRS to steal money. Most contact from the IRS comes via mail. Therefore, it’s important to be extra vigilant if you believe that you are being contacted by phone or text message. The IRS will only contact you via phone for special circumstances like:

• Having an overdue tax bill
• Trying to secure a seriously overdue tax return

In most of these cases, you would’ve received several notices via mail before receiving a phone call.

Additionally, if you do need to make a payment to the IRS, make sure it’s through their online payment portal. The IRS will not ask you to give payment details over the telephone.

Why Does the IRS Contact You?

The IRS may contact you for several different reasons. Not all of them are necessarily bad! Some of the reasons the IRS may reach out to you include the following:

• There’s been a change to your refund
• They are questioning the information on your tax return
• They need to verify your identity
• You have an overdue balance
• The information you provided on your return was insufficient, and they need more detail
• Your return has been changed due to an error
• There is a delay in processing your return

If you want to learn more about the types of notices the IRS sends, read our article on what the IRS sends notices for.

When Should I Get Help?

If you have the slightest suspicion that the notice is inaccurate or are confused about what to do next, you should get help before taking action. IRS Shield can help you understand your notice, determine appropriate action, and even work with the IRS on your behalf. Reach out to us today to get started resolving your IRS notice.

What Does the IRS Send Notices For?

IRS notices can often be confusing, with strange coding and lengthy, unclear explanations of what they mean. It’s stressful enough getting a notice that you owe the IRS money, but having to decipher why you owe money and what you should do seems unfair.

IRS Shield has you covered! In this article, we look at what some of the most common types of IRS notices mean and actionable steps to take after receiving each notice.

Types of IRS Notices

The IRS has several different types of notices that they commonly send. The notices are always identified with a code. Notice codes start with CP, while letter codes start with LTR. Some of the most common letters and notices sent from the IRS include:

• Notice of Proposed Adjustment (CP2000)
• Notice of Balance Due (CP14)
• Reminder of Balance Due (CP501, CP502)
• Intent to Levy Notice (CP504)
• Intent to Seize Assets and Notice of Your Right to a Hearing (CP90)
• Refund of Overpaid Taxes (CP12)
• Changes to 1040, Math Error (CP11)

This section looks at a brief overview of each type of notice and actionable steps to take when receiving said notice.

Notice of Proposed Adjustment – CP2000

If you receive a CP2000 notice from the IRS, it means that there was a difference between the income that you reported on your federal tax return and the income reported to the IRS by third parties. This is an automated notice and is therefore not double-checked by an individual.

The CP2000 comes with instructions and a response form. On the form, you can dispute or agree with the discrepancy. It’s important to complete the response form within the allotted time frame, or else you may lose your opportunity to dispute the information.

Read the article What is a CP2000 Notice to learn more about the details of the notice and how to respond to the IRS.

Notice of Balance Due – CP14

A CP14 notice is the IRS informing you that you have an unpaid balance and you need to pay it. You’ll typically receive a CP14 if you reported that you owed taxes on your tax return but have not paid them.

If you agree with the information on the notice and have the money to pay your balance, you should do so immediately to avoid further penalties. However, if there is a discrepancy or you are unable to pay the balance, you should work with the IRS to get the error corrected or set up a payment plan. For further details on action items, check out What is a CP14 Notice.

Reminder of Balance Due – CP501 & CP502

The CP501 is very similar to the CP14 in that it lets you know that you owe the IRS money. Most people with an outstanding balance will receive a CP501 and a CP14.

The CP502 is a second reminder that you have an outstanding unpaid tax balance. If you receive this notice and have already paid your balance, it’s essential to contact the IRS to confirm that you’ve made payment.

Intent to Levy Notice – CP504

You will receive a CP504 if you have received a notice from the IRS stating an unpaid balance and failed to either set up a payment agreement or pay the balance. The CP504 is also known as “the final notice” and informs you that the IRS intends to levy your state tax refund.

At this point, if you have not already, you should work out an agreement with the IRS. Read an Overview of Tax Debt Relief Options for the best way to proceed.

 Intent to Seize Assets and Notice of Your Right to a Hearing – CP90

If you don’t have a state refund or it’s not enough to cover your unpaid balance, the IRS will send you a CP90. The IRS will start taking money from your paychecks, bank accounts, or even physical property if the balance remains unpaid.

If you receive a CP90, you should contact a professional. IRS Shield is here to help walk you through your options and work with the IRS on your behalf to get you the best possible outcome. Sign-up for our service to get professional support ASAP.

Refund of Overpaid Taxes – CP12

A CP12 is one of the few good notices that you can receive from the IRS. It is essentially the IRS version of “bank error in your favor.” It means that the IRS has made a correction to your tax return that resulted in either you receiving a larger refund or less money owed.

As long as you agree with the correction, you don’t need to do anything! You should receive a check in the mail from the IRS in 4 to 6 weeks for the overpayment or additional refund.

Changes to 1040, Math Error – CP11

The CP11 is sent from the IRS when a math error is identified on your tax return, but it results in you owing more in taxes to the IRS. Essentially it is the exact opposite of the CP12 notice.

As long as you agree with the correction, all you need to do is pay the owed balance to the IRS. You do not need to submit an amended tax return.

Additional Information on IRS Notices

While we’ve only covered some of the most common notices from the IRS in this article, there are several other notices that you can receive from the IRS. For additional information on how to handle IRS notices, read:

• Offer in Compromise: How it Works
• What Can the IRS Do if You Do Not Respond to a Letter?
• Overview of Tax Debt Relief Options

For complete peace of mind, make sure to sign-up for an IRS Shield Membership. With a membership, you get help walking through all of your options when responding to a notice, and we will even respond to several common IRS notices on your behalf. All of this is included for a fraction of the cost of hiring a personal tax accountant!

CP16 Notice: Tax Return Error and Refund Seized

CP16 Notice: Tax Return Error and Refund Seized

Occasionally people will make mistakes when filing their tax returns. While it’s rare that an actual human will review your tax return nowadays, the automated review programs have gotten pretty good at catching common errors. If you make an error on your tax return and owe back taxes to the IRS, you can expect to receive a CP16 Notice from the IRS.

What is a CP16 Notice?

If you are CP16 Notice from the IRS, it means that the IRS has found a discrepancy on your tax return. The two criteria for receiving a CP16 Notice include:

• There’s a miscalculation or other error on your tax return resulting in a refund or a higher refund AND
• The IRS will be applying part of that refund or the entire refund to an outstanding tax debt

Note that both criteria must be met in order to receive a CP16 notice. For example, you’ll receive a CP11 notice if the IRS made a correction and you owe money for the current tax year.

What Information is on a CP16 Notice?

A CP16 notice includes all of the information regarding the changes to your tax situation, including:

• Next steps
• Changes made to your tax return
• Changes made to your tax calculations
• Changes made to your payments and credits

Sometimes the explanation of the changes can be vague. Therefore, the Notice also provides a contact number in case you need to discuss the Notice with someone at the IRS.

What Should I Do If I Receive a CP16 Notice?

Your next actions depend on if you agree with the information provided in the CP16 Notice. The IRS makes mistakes, so it’s essential to review and verify the information.

If You Agree with the CP16 Notice

If you’ve verified that the information on the CP16 Notice is accurate, then you don’t need to take any further action. You will not be receiving a refund check, and as long as the refund would cover your owed tax debt, you don’t owe the IRS anything either.

You should keep the Notice with your tax records and apply the changes to your tax return. That way, in case the issue arises again, or you need to reference your taxes for that given year, you have the information available.

If You Disagree with the CP16 Notice

If you’ve reviewed the CP16 Notice and disagree with the information provided, then you should contact the IRS as soon as possible. An IRS representative will walk you through the changes and let you know what documentation needs to be provided in order to dispute the charges.

Unfortunately, there is no one-size-fits-all solution for the documentation you need to provide to the IRS. What is required will depend on the changes that were made to your tax return. However, in all instances, the documentation must be submitted within 60 days of the date of the CP16.

In this instance, it’s extremely important to get in touch with us. Providing the wrong information could not only result in failing to dispute the Notice, but it could also lead to a full-blown audit.

Do I Owe the IRS Money if I Receive a CP16 Notice?

If you receive a CP16 notice, you don’t necessarily owe the IRS money. If the revision to your return results in your refund covering your entire tax debt, then you don’t owe money.

However, if the newly calculated refund does not cover your previous years’ tax debt, you still owe the remaining debt to the IRS. If you are unable to pay the balance in full, check out your tax debt relief options.

How Do I Find Information on My Back Taxes?

Your CP16 Notice will list any owed back taxes by tax year. However, you should have received several notices notifying you of owed taxes, like a CP501, prior to receiving the CP16.

Will I Still Get a CP16 If I’m on a Payment Plan?

Unfortunately, even if you’ve settled on a payback agreement with the IRS, they still can levy a tax return to apply towards your outstanding tax debt. The good news is that the refund that you would’ve received will be applied to your outstanding debt.

Can I Still Get a Refund if I Receive a CP16 Notice?

Yes! If you’re newly calculated refund exceeds the tax debt owed from previous years, then you will still receive a refund for the difference between your debt and the tax credits received. It’s kind of like the real-life version of the bank error in your favor Monopoly card.

How Can I Avoid Making Mistakes on My Tax Return?

The best way to avoid receiving a C16 notice from the IRS is by completing your tax return accurately. As long as you have all the documentation needed to accurately file your taxes, the best way to avoid making an error on your tax return is by using a verified e-file provider like e.file.tax.net. This helps ensure that you aren’t making errors in your calculations or entering things on the wrong lines.

How Can IRS Shield Help?

The IRS does make mistakes. If you feel that the information on a C16 notice is inaccurate, you should seek assistance. Contact us today to learn more about how we can help you get the tax refund that you deserve, even after receiving a C16 notice.