IRS letter review
for business owners
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Why would I be getting a letter from the IRS?
The IRS may send you a simple request, a heads-up on your return, or an urgent notice. Check out some of the most common letters.
The IRS sends a CP2000 notice when your reported tax return differs from third-party information, such as information from your customers.
Note that the difference isn't always in the IRS's favor.
If you agree with the changes, just pay or accept the refund. If not, answer with a CP2000 response letter to dispute the assessment.
You have the right to contest potential penalties and appeal a CP2000 determination.
If the IRS doesn't hear from you, they typically send a notice of deficiency (IRS 3219 letter) after a CP2000 notice.
Regardless of the version of the notice of deficiency (3219-A, 3219-B, 3219-N, or other), it means the same thing: you owe additional tax, along with potential penalties and interest to the IRS.
To resolve this notice, you need to either pay the amount due or dispute the assessment.
The CP14 notice indicates a balance due – you owe the IRS money. You might receive it if you filed your return, but didn’t pay the money you owe.
If you agree with the amount due, pay it by the deadline indicated on the CP14 notice. If not, contact the IRS.
Additionally, you can request an installment agreement to pay the tax due in installments. You also have the right to appeal.
CP504 is a notice of levy informing you that you owe a balance to the IRS.
If you do not pay the amount due immediately, the IRS can take your state income tax refund or seize your property or business assets.
The CP504 is one of the final notices before you get into serious tax trouble. However, at this stage, you still have time to resolve it by paying the amount due, arranging a payment plan, or requesting an appeal.
You will get a CP22A notice if you changed your tax return or gave the IRS more information about your refund.
In this notice, the IRS confirms they made the changes and specifies the amount you now owe.
If you agree with the changes, pay the amount by the due date indicated in the letter. Otherwise, you will have to pay an interest.
You can also request a payment plan.
The IRS issues a 12C letter to request additional documents for processing your tax return.
You might get this letter if you forgot to sign your tax return, attach a schedule, or did not include verification of income, credit amounts, or other information.
You can resolve this notice by sending the requested documents to the address indicated in the letter.
Forward your IRS letter to a tax professional
The IRS correspondence may be alarming for a business owner, especially when it is about potential penalties or collection problems.
If you need support with your IRS letter, we are here to help.
- concise summary of the IRS letter
- expert assessment of the escalation level of your case
- professional advice on handling the overdue response date to a notice
- detailed action plan to reduce your interest, penalties, and ensure compliance
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The process is transparent and simple. If you need support at any stage, your CPA and TFX staff will assist you in no time.
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