Understanding Common IRS Notices

Sometimes, the IRS will contact a taxpayer through a notice or letter, explain the reason for the contact, and give the taxpayer instructions on how to handle the issue. The IRS sends millions of letters and notices to taxpayers each year. Although receiving a notice from the IRS can make anyone anxious, many notices are easy to resolve and don’t result in full-blown audits.

If you have clients who receive notices, tell them not to panic! Tell them to follow the instructions in the letter – or you can help and answer the notice for them. In many cases, there is no need to call or visit the IRS to answer most notices. However, remember to tell your clients to retain copies of any correspondence with their tax records, and/or you can keep the correspondence with their files online at your office.

CP2000 and CP12 are the most common notices:

CP2000 Notice – This is issued when the income and/or payment information doesn’t match the information reported on the tax return. This could affect the taxpayer’s return, thereby causing an increase in tax, decrease in tax, or no change it at all.

CP12 Notice – The IRS issues a CP12 Notice when it corrects one or more mistakes on the taxpayer’s return, and a payment becomes an overpayment or an original overpayment amount has changed.

Good luck!

Editor’s note: For more information, check out other articles in Mike D’Avolio’s series on audits.