Why You May Have Received a Letter From the IRS
We have noticed an influx of clients receiving tax notices now that the April deadline has passed and 2022 returns are being processed by the IRS. Receiving a letter from the IRS can be intimidating and can lead to many questions. At Abacus, we are here to help.
There are a few main reasons why you may receive a letter from the IRS:
1) The amount due is different on that tax return because the estimated tax payments do not match the IRS records. In this situation, there are a few steps you need to take.
a. First, review your estimate payment records. If you made all payments online, you should have a receipt of the payment. Verify that the
amount paid and the year paid are for the correct year. Taxpayers sometimes include prior year tax payments as estimate payments, which is a
common error we see.
b. If you made any payments via check, did the check get cashed? The IRS is behind on processing mail so perhaps the check has not been
cashed. If that is the case, do NOT cancel the check, wait for the IRS to process the payment. To avoid a check not being processed, we advise
that taxpayers make estimates and balance-due payments online when applicable.
c. If after review, your records match the IRS records, then no action is required other than to make the required payment.
d. If you verified the payments provided are correct as indicated on the return you filed, you need to respond to the IRS by their deadline. Send
the following information:
i. Copy of the notice
ii. Proof of payment, including amount, date
paid, and year it was intended for.
2) Another reason is if additional income was added to the return due to a missed W2. Some taxpayers will find it unnecessary to include some income because the withholdings might cover the tax owed, however, based on experience that is not always the case. By adding additional income, the tax bracket in which the tax is calculated goes up and could be underpaid. The IRS will also assess penalties and interest on the additional amount due generated by the additional income. The good news is as long as you agree that the income was in fact earned, there is no action required other than making arrangements to pay the balance due.
3) Finally, you may have received a letter because of balance due notice. If you owed money when you filed your return, the IRS will send you a CP14 Notice. If you receive this notice, the main two responses are to 1) pay the balance on the notice or 2) if you can’t afford to pay the balance on the notice, set up a payment plan. You can set up a payment plan on the IRS website. If you owe for multiple years and are interested in a multi-year payment plan, please contact us and we can discuss how Abacus can assist you.
No matter the type of notice you receive it is important to NOT ignore the notice. Depending on the type of notice received, there may be a response deadline that if not met, could have negative impacts on your tax situation. It is also recommended that you send a copy of the notice received to your accountant, as your accountant may need this information to reconcile your tax records.
If you need assistance responding to the IRS regarding the notice you received or need a payment plan set up, Abacus CPAs is here to help. Contact our offices today for more information at 417.380.5000 or transportation@abacus.cpa.
