IRS Letters And Notices

You should respond to all letters and notices if you want to protect your rights or to initiate an action. If the action you decide to take is no action, that is ok too. The further in the collection process you wait to make a correction, the harder and more time consuming it will be. People have paid me thousands of dollars to correct actions that would have been very simple, and less costly, if done the moment the IRS first contacted them. This tax relief guide will give you better information about how to respond. Each letter can be found on the IRS website. Just Google the letter or form number and select the sites you want explanations from, including the link to the IRS website.

Please read my descriptions for each letter. Even if you didn’t get that letter, the descriptions contain a lot of useful information to help you understand the IRS.

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 etc. you did anything! They will record it and it can be used to deny your request for abatement.

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. Appeals are time consuming, and still won’t solve the compliance issues of filing delinquent returns, and payment issues of paying delinquent taxes. If you can’t 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 14 – Request For Tax Payment

This is your first bill for taxes due. A nice simple request for payment. The IRS feels that you still did not pay enough to cover the liability plus interest and penalties. This letter will go to great lengths to explain the interest and penalties, and often less about why you owe money.

CP 22E

This is a change based on the result of an IRS audit examination. You don’t even have to be aware of it! The IRS can and does conduct audits without your knowledge. If they think everything is O.K. then you probably will never know it happened. If not you will get a letter. You should respond with your proof for any items you want to claim are justified as staying the way you reported them. Or you can just agree to their changes. Often the reasons for the change are missing. How nice. Pull your third party payer information and see why they have different information than you. If you can’t get it in time, call and find out why. You may have to make a few calls. Hang in there.

CP 71A or CP 71D – Reminder Of Balance Due

Your annual notice of what is still owed. This notice will also inform you of your “currently not collectable” status. How nice of them!

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 101 – Math Errors

This form consists of math errors they say you made, computational errors, tax deposit errors, or no reply to additional information, etc. If they are wrong, correct them. If they are right, just ignore the letter

CP 161 – Underpaid Tax

This shows the underpaid tax according to the IRS records. Pull your ROA and verify your payments and filing of returns. You will see how the IRS came up with the balance. If you owe it, pay it. Use www.eftps.gov if you are set up. Usually call the IRS office on the letter to resolve it. If you need to do an installment agreement or offer in compromise consult this manual.

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 518 – Your Tax Return Is Overdue

Well now you know. Get it prepared and sent in. If you owe more than you can pay, then prepare to deal with the collection division. Luckily you can be prepared because of this manual.

CP 521 – This Is An Installment Agreement Payment Notice

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. Appeals are time consuming, and still won’t solve the compliance issues of filing delinquent returns, and payment issues of paying delinquent taxes. If you can’t 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 14 – Request For Tax Payment

This is your first bill for taxes due. A nice simple request for payment. The IRS feels that you still did not pay enough to cover the liability plus interest and penalties. This letter will go to great lengths to explain the interest and penalties, and often less about why you owe money.

CP 22E

This is a change based on the result of an IRS audit examination. You don’t even have to be aware of it! The IRS can and does conduct audits without your knowledge. If they think everything is O.K. then you probably will never know it happened. If not you will get a letter. You should respond with your proof for any items you want to claim are justified as staying the way you reported them. Or you can just agree to their changes. Often the reasons for the change are missing. How nice. Pull your third party payer information and see why they have different information than you. If you can’t get it in time, call and find out why. You may have to make a few calls. Hang in there.

CP 71A or CP 71D – Reminder Of Balance Due

Your annual notice of what is still owed. This notice will also inform you of your “currently not collectable” status. How nice of them!

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 101 – Math Errors

This form consists of math errors they say you made, computational errors, tax deposit errors, or no reply to additional information, etc. If they are wrong, correct them. If they are right, just ignore the letter

CP 161 – Underpaid Tax

This shows the underpaid tax according to the IRS records. Pull your ROA and verify your payments and filing of returns. You will see how the IRS came up with the balance. If you owe it, pay it. Use www.eftps.gov if you are set up. Usually call the IRS office on the letter to resolve it. If you need to do an installment agreement or offer in compromise consult this manual.

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 518 – Your Tax Return Is Overdue

Well now you know. Get it prepared and sent in. If you owe more than you can pay, then prepare to deal with the collection division. Luckily you can be prepared because of this manual.

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 522 – Two Year Review For More Financial Statement Information

Be careful responding. If your income has gone up, your monthly payments to the IRS will probably go up too. Maybe your living expenses, especially medical, has increased too! You want to maximize deductions to offset any increase in income. If you need to lower your monthly payments, argue that too.

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 525 – 30 Day Letter To Appeal

This comes with your audit adjustment letter. It gives you 30 days to appeal if you disagree with the adjustments. It’s a good idea to prepare this appeal along with your continued arguments and give it to the auditor. This way you protect your rights if you and the auditor disagree about the changes.

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.

CP 566 – Initial Contact Letter On An Audit

Be glad you received it. Many audits take place without taxpayer notification. At least you get a chance up front to defend your positions. Make sure you prepare properly.

Form 668W – Wage Levy

Fill out the exemption portion so you can get the biggest paycheck. This is a very serious collection action. If you want your next full check, you need to take care of delinquent filings and information the IRS needs from you to determine a payback plan right away. Get your information together and ” paint a defensible picture” of your financial situation as instructed in this manual. File any delinquent returns, and pay any current payments of estimated taxes that are delinquent (or prove that you are not required to make one by providing your estimated tax calculation). Provide this calculation anyway if your payment is less than it normally should be. Then call for an immediate levy release. Give them the name and the fax number of the person in your company whose job it is to receive wage levy releases. Your social security or retirement can be levied.