IRS Notices

Understanding IRS Notices

This tax relief site will give you better information about how to respond. Each letter can be found on the IRS web site. Just Google the letter or form number and select the sites you want explanations from, including the link to the IRS web site.

Please read my descriptions for each letter. Even if you didn’t get that letter, the descriptions contain a sample of the useful information these letters contain. It should help you understand the IRS letters better.

Great Tax Reduction Technique

What if you get a letter from the IRS charging you additional tax based on a math error or a clerical error? How would you like to avoid paying it? Here’s how… write back within 60 days and say you request an abatement under section 6213(b)(2). This may get it abated. It’s worth a try. Sometimes they reassess it, but they must issue a “notice of deficiency” giving you appeal rights. Include in the letter a statement that you disagree with the additional tax and the action you want taken, such as “I disagree with the additional tax assessment because I did everything correctly and I want you to remove the taxes.” Also state that if they don’t remove the taxes, you are requesting that they issue a notice of deficiency so you can file an appeal. The notice of deficiency will list the changes that they made. (Often you get a correction letter that doesn’t spell out why they made the changes in the first place.) Use this approach for letters involving a missing SS# (supply the number and copy of Social Security card if you have it, in your letter). Send your letter to the address they request you respond to. Never be afraid to call or write for an explanation of the letter or the adjustments being made. You may just want to pay it, or if you are contesting it, you have a better understanding of what you are contesting. If you do call for an explanation, do not give any information as to what and why you did anything! They will record it and it can be used to deny your request for abatement.

Types Of IRS Notices Explained

CP 11 We Changed Your Return You Have A Balance Due
This notice reflects adjustments the IRS made to your return and the effect it had on penalties and interest. If you don’t agree, speak up now, usually the longer you are in the collection process the harder it is to undo things. If you don’t understand why the changes were made, contact the IRS and ask. You don’t have to answer questions beyond the verifying questions to prove that you are you, or make promises of when you will make payment. Just say you will call back soon after looking into the matter.

Letter 11 Final Notice Of Intent To Levy

And notice of your right to a hearing. You have 30 days to appeal. I prefer solving the case before that time and getting the R.O. to hold off on the levy. Filing appeals can be time consuming, and still won’t resolve the compliance issues of filing delinquent returns, and the payment issues concerning delinquent income taxes. If you are unable to file the delinquent taxes and fill out the collection information statements within the 30 days, call the R.O. or ACS and explain your great desire to cooperate. Give them what they want, give them some answers they want, and you will probably be given more time. If not call back again. Don’t give up. You are allowed to have time to resolve your case.

CP 90 – Final Notice Of Intent To Levy And Notice Of Right To A Hearing
As it says, they will levy. The ball is in your court to fix what is wrong. To get into compliance and work out payment arrangements. You have 30 days to appeal the notice of levy. Not any other collection action by the collection division, not the tax in the first place, just the levy. You can appeal a lien separately as a lien appeal. You can appeal a collection action with a specific appeal for that. You appeal the tax by an offer, appeal, or tax court petition. I’ve had cases where my client started the appeals process, only to find out they didn’t understand what they were appealing exactly, so the appeal was lost. What a waste of time and money! Match your appeals properly.

CP 210 or CP 220 – Penalty Notice For Failure To Deposit
Check your records against the IRS. Check circular E and make sure you understand when to make your deposits, and how much they should be. You should not rely on IRS notices to tell you how often to deposit. You also must use the correct deposit method. Certain large employers must use electronic deposits and not regular bank deposits.

CP 297

See CP-90 final notice

CP 501 or CP 502 – Reminder Of Balance Due, etc.

These are initial requests before the CP-503 and CP-504 are issued. You are in notice status now. Probably no collection action yet if this is your only IRS contact. What a great time to plan for your resolution with this guide!

CP 503 – Important Immediate Action Required

If you have received this notice, it means you have ignored the initial tax bill, CP-14, they skipped the CP-501 and CP-502 notices (or you received them prior to this), or your case is back in collections after being declared “currently not collectable” for a while. If you owe for more than one tax period, you will receive this notice even if you made arrangements to make installment payments, or you have been placed in a “hardship” status. It will say on the face of it to ignore it if you have entered into an installment agreement or paid the balance. As long as you have confirmed this, then you can ignore the letter.

CP 504 – Urgent We Intend To Levy On Certain Assets
This means that you have 30 days before they will actually levy a bank account or wages, etc. If you owe for more than one tax period, you will receive one of these notices each year. You may receive this notice even if you have made arrangements to make installment payments, or you have been placed in a “hardship” status. You may get this notice at any stage of collections. It requires immediate attention. See the chapters on working your case.

CP 515 – Request For Your Tax Return
If you have received this notice, it means you have failed to file a tax return, or at least the IRS has not logged in a copy on their computer system. The type of return and tax period will be shown in the upper right corner as well as in the body of the notice. File the return as soon as possible, otherwise your case will be transferred to an audit group who will prepare the return for you, without those necessary deductions you need to lower your liability.

CP 521 – This Is An Installment Agreement Payment Notice
As long as you are meeting your terms of your payment plan, there is nothing else for you to do. If you’ve broken your agreement, even if you didn’t receive this notice, take the initiative to immediately get back into your agreement.

CP 523 – Notice Of Intent To Levy
Oops, either you defaulted on your agreement or the IRS isn’t posting your payments properly. Remember the IRS must receive payment by the due date of your monthly payments. They must also receive payment by the due dates for all taxes you are liable for. Not a day late or a dollar short. In the past they used to break your agreement and levy your account. Now, they give you about a week to straighten it out. Call and get it fixed.

CP 531 – Notice Of Deficiency
This shows how much you owe for each year, and how to dispute the adjustments. In many dispute cases you must pay first, and then file a claim for refund. Otherwise you have 90 days to file a tax court petition.

Letter 1058 – Final Notice Of Intent To Levy And Notice Of Your Rights To A Hearing. Please Respond Immediately.
If you received this notice, it means you owe tax and have ignored Letter 2050. This is one the most serious collection attempt notices the IRS sends to a taxpayer owing tax. It must be responded to or you will lose appeal rights and the IRS will levy anything they can find. As always prepare a preliminary financial statement to know where you stand before contacting the IRS.

CP 2000 – We Are Proposing Changes To Your Return
The IRS sends you this notice if you have omitted income from your return or the amount of income or expenses on your return does not match the amount reported to the IRS. The following pages will provide an explanation of the changes followed by a detailed listing of the items that were left off your return or did not match the amounts reported to the IRS. Respond immediately, with all the proof you have to sway them to your way of thinking. Do not shortcut your proof.

Letter 2050 – Please Call Us About Your Overdue Taxes Or Returns
If you owe tax and you have ignored previous notices CP-504 or CP-523 or you have delinquent tax returns, the IRS will send you this letter. You may receive this notice even if you have made arrangements to make installment payments or you have been placed in a “hardship” status. Do not call. Spend time now preparing the delinquent returns, and preparing your financial statements.

Letter 3172 – Notice Of Federal Tax Lien And Right To A Hearing
You now have a real property lien in a particular county only. Just the county listed. Not all counties you own property in. I have had clients that sold all property they had in other counties and used this money to help them negotiate better payment plans. If the lien will cause a hardship, one acceptable to the IRS, then appeal it.

Letter 3219 – Notice Of Deficiency

This notice is issued to a taxpayer before an assessment is made. Usually, as the result of an audit. If you disagree, you need to file a tax court petition within 90 days. You can file an appeal to contest it. Don’t worry; if you miss the deadline for an appeal you can usually get Appeals to take the case, by filing a tax court petition. Once accepted by the IRS legal division you can call and convince them that this is really a case to be heard by Appeals.

Letter 3228 – Annual Reminder Notice

This is a notice to let you know what taxes and years you owe. This is sent yearly as long as there is an unpaid balance.

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