One of the most common types of contact from the IRS is a computer-generated notice in which the Service proposes to increase the tax liability for a return that has been filed. The IRS is authorized to make changes to your return in some cases without a formal audit. These notices include:
Correction Notices: to correct math errors and similar items.
Penalty Assessment Notices: typically encountered for the late filing of a return or late payment of a tax.
Interest Assessment Notices: generated to charge interest when a tax is not paid on time.
Underreporter Program Notices: Generated when information reported to the IRS from an outside source (such as a Form W-2 or 1099) does not match what is reflected on the tax return.
The most common automated adjustment notice is the CP-2000 Notice in which the IRS proposes changes to a taxpayer’s return. Sometimes these notices are incorrect. Sometimes the information has been presented in the taxpayer’s return in a way that causes the notice to be issued and that information needs to be clarified to the IRS. Sometimes the taxpayer prepared their return not realizing that they needed to disclose certain information that would have avoided these notices being sent.
Taxpayers who do not have an extensive understanding of the tax law often assume the worst and blindly accept the accuracy of what the IRS is proposing and go ahead and pay the additional tax due that is reflected on the IRS notice, or worse, ignore the notice and the IRS proceeds to assess the additional tax liability and initiate collection action.
We offer taxpayers the service of reviewing their IRS notice(s) and provide the taxpayer feedback on analysis of the accuracy of what the IRS is proposing. We then offer a game plan for responding and resolving the issue(s) raised in the IRS notice. Click here to contact us to discuss your IRS notice.
While sometimes the amounts proposed in an IRS notice are accurate, there are often times when we are able to identify actions which can be taken to either reduce or eliminate the additional taxes, interest, and penalties which the IRS is proposing. We have also frequently been able to assist taxpayers in reducing penalty assessments even when the additional tax liability is due.
Even if the additional assessment is correct, at least the taxpayer has the peace of mind that an experienced tax professional with their best interest in mind has reviewed the notice.