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Handling a 'Wrong Information' Form From the IRS


You'll receive a letter from the IRS when the information on your tax return doesn't match the data reported to the Internal Revenue Service by employers, banks and other third parties. The letter is called an IRS Notice CP2000. It gives detailed information about the issues the IRS has identified and provides steps you should take to resolve them.

You don't have to panic — a CP2000 isn't a formal audit notification. It's just a notice, and your part of the bargain is to agree or disagree with the proposed tax changes. You have 30 days from the date on the notice to respond, although sometimes you can get an extension. 

If you ignore it, the follow-up notice is an IRS CP3219A. If you wait to receive that notice, you'll get detailed information about why the IRS proposes the tax change and how the agency determined the change. This notice also tells you about your right to challenge the decision in U.S. Tax Court. If you decide that seeing the inside of Tax Court is not all it's cracked up to be, the IRS will work with you during the statutory notice time frame.

Now, if you agree with the changes, sign Form 5564, Notice of Deficiency-Waiver, and mail it to the address shown on the notice. If you disagree, you can file a petition with the Tax Court no later than the date shown on the notice.

And here's something you should know: The court can't consider your case if you file the petition late. The IRS suggests you look at other returns you've filed to make sure they don't have the same mistake. Also, it behooves you to correct the copy of the tax return you've kept for your records. 

You may owe more money to the IRS and may need to think about payment plans and installment agreements if you can't pay the full amount of taxes you owe.

And here's another thought: What if you want the IRS to consider additional information? The agency says you should send it along with a written explanation supporting your position. You can also contact whoever reported the information and ask that institution to correct it.

The scary thing you may uncover is identity theft, in which case you send in Form 14039, an Identity Theft Affidavit. You also can go to the Identity Theft Information webpage on the IRS site for more details.

You may be surprised that you received a notice long after a return was filed. Says the IRS: "Our computer systems match the information you report on your tax return with information reported by employers, banks, businesses and others. This matching takes several months to complete." So if your return is accepted and you get your refund, it doesn't mean you're in the clear.

And finally, yes, you will be charged interest on the money you now owe the IRS. It accrues until you pay the amount in full.

If you get a notice, be sure to contact us so we can advise you.

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Coulter & Justus, P.C.
Coulter & Justus, PC
(865) 637-4161
9717 Cogdill Rd, Suite 201
Knoxville, TN 37932
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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