The Top Reasons Why the IRS Notifies You

The IRS is a powerful agency that not only oversees the collection of taxes but also has the authority to impose penalties, conduct criminal investigations, and seize assets. It’s understandable why receiving a notification from the IRS can make anyone panic. However, the IRS sends letters to taxpayers for various reasons. Before you worry, here are the different reasons why the IRS has notified you.  

You have a balance due. 

Notice CP14 is also known as the 1st notice. You will receive this notice because you owe the IRS money on one of your tax accounts. It will inform you of the balance amount, when it’s due, and how to pay off your balance. You will likely receive the CP501, a reminder of your balance, if you do not respond to the CP14.  

You are due a larger or smaller refund. 

The CP12 Notice lets you know that the IRS has corrected a mistake or mistakes on your tax return, resulting in either a refund or the original amount has been changed to either be larger or smaller.  

The IRS has a question about your tax return. 

The CP2501 is the notice regarding a discrepancy on your tax return. The IRS may have some questions about the accuracy of your tax return and request clarification. Upon receiving this notice, you’ll have a 30-day deadline to contact the IRS to explain why the information on your tax return doesn’t match what they have on file.  

The IRS needs to verify your identity. 

There are cases in which the taxpayer is suspected of being a victim of identity theft. To prevent future fraud, the IRS may contact you to ask you to verify your identity.  

The IRS needs additional information.  

Letter 12C is an information request. The IRS sends this notice when they need additional information in order to process a tax return. The missing information can be various things, including verification of income or a signature.  

The IRS changed your return. 

Letter 525 informs you that changes have been proposed following an IRS examination, which happens if you were selected for an audit. You will have 30 days to dispute the proposed change.  

The IRS may also determine that you have underpaid and owe taxes on your return. A notice of deficiency or Letter 3219 notifies you that the amount due to the IRS has changed. Upon receipt of this notice, you’ll have 90 days to petition the determination.  

The IRS needs to notify you of delays in processing your return. 

Delays happen – even with the IRS. The global pandemic, for example, disrupted mission-critical functions such as live phone support and processing tax returns. Delays may also happen if your return is incomplete or incorrect.  

Letter 707C is the notice you should receive if there’s a delay in processing your refund or return. You may also receive this letter if you have a refund forthcoming.  

While you shouldn’t panic each time you receive a notice from the IRS, you should still act. Not responding to the IRS can lead to consequences. If you need assistance in responding to an IRS notice, click here for a consultation or call 844 229 8936.

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