When the Internal Revenue Service (IRS) believes to have uncovered an issue concerning your tax return, the agency will contact you through mail with CP series notice. It is to be noted that the IRS never emails or calls any taxpayer at first contact when it comes to tax delinquency. The most common IRS notice is the CP2000.
Penalties and interest
Tax fault notices dispatched by the IRS include proposed tax amount due and any penalties or interest, if applicable. A typical notice includes an elaboration of the examination technique used to find the delinquency. It also mentions the mediums through which you can contact IRS regarding the matter.
Notices highlighting penalty or interest payment are sent out all through the year and are common. Since the Internal Revenue Service is trying to bridge the US tax gap, there is a new found aggression in the agency’s collection efforts. To further complicate the situation, a large number of taxpayers use unreliable software to e-file their returns, which give them inaccurate tax numbers and lead to a rise in dispatching of notices. Even minor tax mistakes add up to appear like major ones. The automated process begins when IRS matches the taxpayer’s return to the data provided by third parties. The effort of automated collection starts only when the two sets of information do not match.
You need not panic though if you get a notice from the tax department. Remember such notices are frequently scarred with errors. However, you must realize that there is an urgent need for you to respond to such communication, which is within 30 days. If there is a delay in replying to the notice, you may have to face serious repercussions. To avoid it, you must first find out the kind of notice sent to you. A CP2000 notice can be much different compared to many other CP notices, which look into earned income credit.
Do note that a CP2000 notice is always inclusive of a proposed and unfavorable variation to the tax return filed by you. The notice offers you a good opportunity to dispute such proposed changes. If you do nothing about the notice, the IRS will simply speed up its efforts of collecting unpaid taxes from you.
However, the IRS may not always be wrong. It is quite possible that you may have committed a mistake while filing your taxes. You may have erred on glossing over a capital gain or income from your second job, to give an example. To keep your chances of goofing up with the tax process, it is advisable to hire a professional to do the job for you.
If you have recently received an IRS notice and need some guidance contact the tax professionals at Wealthnest Tax Services. We would be more than happy to assist you and put your mind at ease!