IRS Notices

IRS Notices - CP 2000 noticesToday TaxMama® hears from Paul in the TaxQuips Forum, with this common issue. “I just received a CP2000 Notice from the IRS informing me of $1,900 in proposed taxes due from 2013. (On our joint return, I forgot to include my wife’s 1099 earnings in the amount of $5,100.) This amount due seems high, given that we are in a 15% tax bracket (not a nearly 40% bracket).”


Dear TaxMama Family,

My answer to Paul is posted in the TaxQuips Forum. But I want to talk to you about these IRS notices in general.

Interesting, I’ve had a couple of questions this week about CP-2000 notices issued on the 2013 tax returns. They are late. Usually, they are issued by about September of the filing year (i.e. 2014).

Don’t be afraid. This isn’t an audit. These CP-2000 notices are computer-generated and based on a cross-reference of W-2s, 1099s, etc that the IRS received, that should be on your tax return. Quite often, you have reported the income – only not where the computer expected to find it. You can clear up that problem easily by making a phone call or writing a letter to the IRS to explain where you reported the income.

If the notice IS correct, just pay the balance due. Generally, these CP-2000 notices will only propose a tax due, but no penalties will be assessed if you pay the balance due. You will, however, owe interest.

What’s if you cannot pay the balance due? Don’t worry. The IRS has made it easy for most people to set up your own installment plan. You can do it online if you owe less than $50,000 including penalties and interest. You don’t need to pay anyone a thousand dollars or more to do it for you. But you will pay the IRS an administrative fee – $52 or $120. And you will need to be in compliance (current on withholding and/or estimated tax payments) to get your agreement accepted automatically.

And remember, you can find answers to all kinds of questions about IRS notices and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

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