IRS Notices - Explanations of CP 11 - CP 57

CP 11 and CP 11A - Changes to Tax Returns, Balance Due

Why You Got This IRS Notice

The IRS Letter CP 11 and CP 11A are sent to you if you presently owe the IRS money. This is the first way that the IRS suggests you may have a tax problem and may need some tax help. Oftentimes, this IRS notice is sent if you have made changes to your tax return, even if done on your behalf by a CPA or tax attorney that you signed a Power of Attorney with to handle your IRS tax issues. Both of these IRS notices are sent when there are changes made to your tax return during processing that results in a new tax debt you owe the IRS. CP 11 A is a sub-category that tells the taxpayer one of the changes made affected your Earned Income Tax Credit.

How to Resolve This Tax Problem

This tax issue can be resolved if you pay the amount due as shown on the letter. You can mail in payment to the IRS, along with the bottom part of the CP 11 or CP 11A Notice, in the envelope provided with the notice, or call your tax representative for assistance to reach resolution of this tax matter. If you can't afford to pay the tax debt you owe or you disagree with the claim that you owe additional taxes, you still need to seek help to get this resolved immediately. You can call the IRS at the number at the top of the notice, or contact your tax representative for help. There are many different types of solutions available. For example, you may qualify for an installment agreement to pay your tax liability gradually over time. Doing this breaks your tax balance into smaller, easier to pay amounts.

Why You Need to Resolve This Tax Issue

Getting current with the IRS is the best long-term solution to your tax problem and outstanding tax debt. If you don't pay or make arrangements to pay, the IRS can do several things to collect, none of which are ideal for you the taxpayer. One action the IRS frequently takes in this situation is to file a Notice of Federal Tax Lien. A tax lien is a legal claim that IRS makes on your property as security or payment for your tax debt. Please don't let it get to this point, because it will not just go away but only gets more complicated. Even if you don't agree with the tax debt, call the IRS or a tax consultant today to start the process of resolving the issue.

CP 12 - Changes to Tax Return, Overpayment

Why You Got This IRS Notice

You get the IRS Notice CP 12 when you have an overpayment of IRS taxes. This is good news, since it probably means you are due a tax refund from the IRS. Sometimes the IRS will find and correct mistakes on your tax return when they process it, which can work in your favor and reduce your tax liability. When this happens, the IRS will send Notice CP 12 to let you know your expected tax refund has increased or that your expected tax liability has actually been decreased or even entirely removed and you are now due back money from the IRS.

The first page of the notice breaks down your particular tax situation by showing you the figures on your return as filed and the figures after the IRS corrections. The second page tells you specifically what items the IRS corrected, as well as any interest and penalty charges you may owe.

What You Need To Do

If You Agree With the Tax Correction

Relax and enjoy the unexpected additional tax refund or reduction in your tax burden. There is no need to reply to the notice. The IRS just asks that you note the correction on your return for future reference. This is a good time to remind you that proper recording keeping is very important to make sure you have the proper documentation in case of an IRS tax audit in the future. The IRS will issue a tax refund in six to eight weeks, unless you owe other amounts above and beyond this tax refund, like any unpaid taxes, penalties, or interest on another tax account.

If You Don't Agree With the Tax Correction

First, let's consider the case where you feel like you are entitled to a larger tax refund. In this situation, you must prove to the IRS that this is the case. You can do this by contacting your tax representative or by trying to call the IRS and explain the situation to them. They may ask you for your prior tax records and to fill out some additional paperwork. When this process is completed, you can go ahead and cash any tax refund check you may have received from the IRS. If it is found you are in fact owed additional money, the IRS will issue another check in six to eight weeks after correcting your account.

The second case is if you feel like the IRS gave you too much of a tax refund. Don't laugh, this does happen from time to time! If this happens, please work to resolve the tax matter, do not think the IRS will fail to discover the error. There are two things you need to do:

First, write void on the refund check and return it to the IRS. Do not cash it. Upon receipt, the IRS will credit your account and if you're entitled to a smaller refund, you should see that check in the standard six to eight weeks after they make the correction. If you already cashed the check, send the IRS your tax repayment immediately. If you do this, the IRS will not charge you any interest penalty since it was their mistake to begin with.

Second, the IRS needs to know why your figures were correct when you filed the return. If the correction is straight-forward, like removing an additional tax exemption the IRS gave you by mistake, we recommend you call the IRS and explain the issue to them. If the correction is more complicated, it's best to send the IRS a written explanation with copies of the appropriate supporting tax documentation.

Why Action is Important in This Situation

It's important that your account reflects accurate information. That is the goal of the IRS, whether that means you owe more in taxes or they owe you a tax refund. The IRS wants you to check your figures against theirs to determine which are correct, since mistakes do happen all the time. As mentioned above, there's no need to respond if you agree with the correction in the overpayment of your taxes. If you don't agree, though, please call your tax representative or the IRS to begin the conversation that leads to correct, complete tax records for yourself and your loved ones.

CP 14 - Balance Due

Why You Got This IRS Notice

IRS Notice CP 14 was sent to inform you of the amount of taxes you owe the IRS, according to their current tax records. This IRS letter is not simply a numerical or calculation error notice. It shows you the amount of underpaid tax as well as the tax you reported on the return in question and the tax credits the IRS applied.

How You Can Resolve This Tax Problem

If You Agree With the Notice

The first thing you can do is to simply check the list of payments the IRS has on tax record for your account. You may want to seek tax help by contacting your tax representative to ensure this investigation is handled promptly and in full, as it can become a long drawn out process. A good place to start if the amount of your payment differs from the one reflected in the IRS records is to give the IRS this information so that they can try to verify the payment and correct your records.

Many times, a misapplied payment is the reason for the tax balance due. If the IRS finds the payment or finds the amount of payment recorded was incorrect in your tax records, they should remove or reduce any penalties and interest caused by the underpayment of tax payments. Unfortunately, this process can take time and it is up to you or your tax representative to ensure this is handled properly.

In addition, sometimes things can work the other way. If the payments shown in your records agree with the amounts listed on your IRS Notice CP 14, then you must pay the total amount due by the date shown on the notice. We understand this situation can be unfair because the IRS is simply re-checking their records against your claims, so if it is their records themselves that are incorrect, you may not be able to prove your case and fix the problem.

If you don't pay the amount due by that date, the IRS will charge additional tax penalties and interest. You may be able to request an installment agreement that allows you to pay what you owe in smaller, more manageable amounts. If you do not, the IRS may file a Notice of Federal Tax Lien or even garnish your wages in order to collect the taxes you owe. If you received this notice even after you paid the amount you owe, give the IRS a call to make sure they received your payment. The quicker you can get tax help to resolve your tax problem, the better.

If You Do Not Agree With the Notice

The action you should take depends on the reason stated in the IRS Notice CP 14 for the underpayment of taxes. You can speak with your tax representative to decide which course of action would be most effective, or you can try calling the IRS directly at the number printed at the top of the notice to resolve the tax account. Listed below are some common reasons for disagreeing with the notice and some basic suggestions on how to resolve the tax issue:

You Feel the IRS is Missing One of Your Tax Payments

Try to call the IRS at the number printed at the top of the notice. Be sure to have your canceled check handy when you make the phone call. Once you get on the phone with an IRS tax representative, inform him or her of the amount of the missing payment. The agent should see if they can find it while you wait. If they can't find the payment right away, they may ask you to read the encoding information that's printed on the back of most checks. Oftentimes you can arrange for the IRS agent to record your information and suspend any tax collection activity while they continue to look for your tax payment. If the IRS still can't find the payment, they should send you a letter asking for a clear photocopy of both sides of the canceled check.

The Total Tax Shown On the Notice is Different From the Tax on Your Return

Try to call the IRS to inform them of the discrepancy. Sometimes the IRS processes returns to the wrong accounts and even to the wrong taxpayer entirely. Another reason for this error is that due to the sheer volume of tax returns the IRS processes, they occasionally hit the incorrect key and process the return with a wrong tax period. These errors can cause a IRS Notice CP 14 to be sent to you, at which point you will notice this difference in tax amounts between the notice and your tax return.

The Amount of Your Payment Doesn't Agree With Amount Shown on the Notice

Try to send the IRS a photocopy of both sides of the canceled check along with a copy of your bank statement showing the amount that was deducted from your account. This typically takes more time than finding a missing payment, but the IRS should suspend all collection activity until it's resolved.

The IRS Hasn't Processed Your Amended Return

Sometimes the IRS is slow in processing amended tax returns. If your amended tax return had a tax decrease and you are waiting for this decrease to zero out your current tax account balance, then you may get this IRS Notice CP 14 in the interim. For all the IRS knows, before the amended tax return is actually processed, you still owe a balance. You can try to call the IRS to see if your amended return has been processed after the notice was issued.

CP 21B - Data Processing Adjustment Notice, Over $1 or More

Why You Got This IRS Notice

This is a good notice to get. The IRS CP 21B Data Processing Adjustment Notice is telling you that a change has been made to your account which resulted in a previous tax overpayment and that you are now in fact due a tax refund. Not a bad letter to find in your mailbox at all!

What You Have To Do

There is nothing for you to do. Provided that you owe no other taxes, you should receive a refund within 30 days of the date on the notice. If you do not agree with this notice, speak with your tax representative or call the IRS at the number printed at the top of the notice. It is typically a simple matter to clarify and resolve any issues you may have with respect to this IRS notice.

CP 22A and 22E - Adjustment Notice, Balance Due

Why You Got This IRS Notice

If you get IRS Notice CP 22A, this means that you have a new tax debt balance of at least $5 or more. This new tax balance was caused due to data processing adjustments made to your account by the IRS.

IRS Notice CP 22E is essentially telling you the same thing: you have a new tax balance due of $5 or more. In this case, the notice is the result of the IRS making an exam tax adjustment to your account.

How You Can Fix This Tax Problem

If you agree with the tax adjustments the IRS has made, the simple solution is to pay the amount due as shown on your notice. You can mail the IRS your payment in the envelope included with the notice, just be sure to include the bottom part of the notice to make sure they correctly credit your account. You can also electronically pay this tax debt or pay over the phone for a more immediate resolution, just speak with your tax representative on these other options.

If you can't presently pay the whole tax debt, you can try to call the IRS at the number printed at the top of the notice to see what options may be available to you. A tax professional can outline all of the additional options that may be available to you based on your situation. For example, you could qualify for an installment agreement or offer in compromise, or OIC, to reduce this new, unexpected tax debt. Do not delay, as you do not have much time. You should contact a tax professional, the IRS, or pay the tax burden immediately.

Why You Need to Resolve Your Tax Issue

As with any tax debt, if you don't pay or make arrangements to pay, and other attempts to collect the money fail, the IRS may come after your assets or start garnishing your wages to force you to pay your tax obligation. One method available to the IRS is to file a Notice of Federal Tax Lien, and after that, to actually levy some of your private property. The lien gives the IRS a legal claim to your property as security or payment for your tax debt, while a levy is a legal seizure of your property. A levy does not require court authorization. Again, if your situation gets to this point, you should immediately speak with a tax representative who can help resolve your tax problems on your behalf, or immediately speak with the IRS for advice on how they want you to pay your outstanding tax debt.

CP 23 - Estimated Tax Discrepancy, Balance Due

Why You Got This IRS Notice

IRS Notice CP 23 is telling you that you have a new tax balance on your account due to an estimated tax discrepancy. Specifically, this tax balance resulted from a difference between the amount of estimated tax payments claimed on your tax return and the amount posted to your tax account. The IRS may have made corrections to your tax return to try to fix this tax problem, and if so, the notice reflects these tax changes in the balance due on your account.

How You Can Fix This Tax Problem

As always, the quickest way to resolve this tax problem is to pay the IRS the amount due as shown on the notice. This approach should be followed if you agree with the IRS correction to your tax account and you have sufficient funds to make the payment. The IRS even includes an envelope with the notice to make it easier for you to do this. If you decide to resolve you tax debt in this manner, be sure to include the bottom part of the notice to make sure the IRS correctly credits your account.

If you can't pay the whole amount now, there are typically options available to you to pay your tax balance at a slower rate or even to reduce your tax debt. Examples of such options are an installment agreement and offer in compromise with the IRS. This is done on a case by case basis and requires filing the proper financial paperwork and tax forms to begin the process. You can consult with a tax professional to handle this process on your behalf, or you can call the IRS directly to begin the steps required to reach a tax resolution.

Now, you may not agree with the IRS corrections and feel as though you do not have the tax balance shown in the notice. There's the possibility that there could have been a mistake and you do not have any tax debt. In this situation, you can speak with a tax representative to get the tax help you need to completely understand all of your possible options. Almost always, these tax professionals offer a free consultation to learn about your situation and discuss these tax solutions with you. If you feel confident of your course of action, you can also call the IRS directly to begin the process of resolving your tax problem.

CP 49 - Overpaid Tax Applied to Other Taxes You Owe

Why You Got This IRS Notice

You received IRS Notice CP 49 because according to IRS records, you had an overpayment on one of your tax accounts while at the same time having an underpayment on another. What the IRS did was when the overpayment became available, they transferred (or offset) all or part of it to the underpaid account. You received this notice to update you on these developments. Now, the notice is a bit long and can be complicated, so next is a section to explain the three parts that make up the notice.

The Three Parts of IRS Notice CP 49

The first part of the notice deals with the overpaid account and tells you three things. First, it displays the total amount of money the IRS applied to other taxes you owed. Second, if you overpaid in the first account by more than your tax debt in the other tax account, this part will show you the amount the IRS will refund back to you. Last, if you already paid your outstanding balance on the second account, the IRS will inform you that they will send you a refund of the entire overpayment of the first account.

The second part of the notice is just like the first in that it also deals with the overpaid account. This section tells you four things: the original overpayment amount, any credit interest the IRS added to the overpayment, the total of the overpayment and the interest, and finally the total amount applied to the account with the balance due.

The third part of the notice deals with the balance due account. This part informs you of four things about your account with an underpayment: the form number, tax period, the total amount applied, and the amount remaining.

How You Can Fix This Tax Situation

There are several possible courses of action you can take to resolve this tax issue. The first thing you have to determine is whether you agree with offset amount or not. In order to do this, you should carefully review copies of the relevant tax returns to refresh yourself of the specifics of the situation. This is best done with the assistance of the tax professional that helped file your tax returns originally. If you filed these returns yourself or no longer use this person, you may want to consider speaking with another tax professional to help guide you through this process. Please take this important first step, as many people assume the IRS is wrong when in fact their records are accurate and their handling of the situation is correct. This initial background investigation will save you a lot of time and frustration later.

If You Agree With the IRS Offset to Your Underpaid Account

First, the best scenario: you agree that the offset amount is correct and it paid the balance due account in full. If you find yourself in this situation, you don't have to do anything, just keep the notice for your records. On the other hand, if you agree that the offset amount is correct but it didn't pay your balance due in full, you should pay the amount remaining on the balance due account to limit IRS penalty and interest charges. You may not be able to afford to pay this off immediately in full, but pay what you can now and try to work with the IRS to reduce the amount you owe or to extend your payback period. These options include an installment agreement and an offer-in-compromise. A tax representative can help identify the best option for your unique circumstances and act in your behalf before the IRS to take care of the situation.

If You Do Not Agree With the IRS Offset to Your Underpaid Account

There are three ways that you could come to this conclusion. Either you believe that the overpayment amount you're getting credit for is incorrect, you think the offset amount applied to your underpaid account is incorrect, or you recently filed an amended tax return. In the first instance, if you believe the overpayment amount was incorrect, you can try to call the IRS at the number printed at the top of the notice and ask them for an explanation. Regardless of if the overpayment resulted from your original return or an amendment to it, the IRS sends notices when the overpayment amount is different than the amount you expected. This situation is explained in more detail in the explanation of IRS Notice CP 12.

Now for the second way you could disagree: if you believe the offset amount to your underpaid tax account was incorrect. This can happen if you have already paid the full balance on your underpaid tax account. Here, stop and think about the timing, because it makes a difference on what can be done for you.

If you paid the balance due account in full more than six weeks ago, call the IRS at the number printed at the top of the notice and have a copy of your canceled check ready. Hopefully they can find the payment while you wait on the phone and apply it to your account. As you may have guessed sometimes the IRS can't find it, so anticipate that they ask you to send them a clear photocopy of your canceled check.

If you paid the balance due account in full less than six weeks ago, still try to call the IRS at the number printed at the top of the notice. They can't do as much in this situation since you just paid your balance recently, but they can check to see if they applied the payment to your account between the time you sent it and the time they issued the notice.

As for the last way you might disagree, if you filed an amended tax return for either the overpaid or balance due account, call the IRS at the number printed at the top of the notice to check on the most current status of your account.

You probably noticed that all three solutions involve you calling the IRS. That is their official advice on how to handle this situation. However, if you are confused about how to explain to the IRS agent about your tax problem or don't have the time to deal with the process, you have the option of getting tax assistance from a tax professional who can handle this matter on your behalf. Dealing with the IRS can be frustrating and time consuming, so this may be a preferable option. Whatever your decision, take action immediately, because your tax problem will not simply go away, and with the power of tax liens, tax levies, and wage garnishments, the IRS will collect from you one way or another.

CP 57 - Notice of Insufficient Funds

Why You Got This IRS Notice

You got IRS Notice CP 57 because a recent payment you made to the IRS was returned by your bank because you did not have sufficient funds. As a result, the IRS is charging you a penalty, and is still seeking to collect on the back taxes you still owe.

How You Can Fix This Tax Problem

If you now have the money in your checking or savings account, you can resolve this tax issue by paying the amount due as shown on the notice. This amount includes the penalty fee the IRS charged you. You can mail the IRS your payment, and remember to include the bottom part of the notice to make sure they process the payment correctly. There are also ways to pay electronically or via the phone.

If you cannot pay off your tax debt immediately, then you should seek out tax help to figure out the best way for you to resolve your tax problem. Speak with a tax professional who can explain all of your various options in dealing with an outstanding debt to the IRS. Such tax representatives are familiar with interacting with IRS agents on taxpayers' behalf, and often times they can negotiate favorable settlements for you. Tax professionals legally represent you before the IRS, including during tax audits and negotiations, so that you can go on living your life. The IRS can be intimidating and confusing, and often it is advisable to seek tax resolution assistance, especially if you have a large unpaid tax debt.

If you don't agree or have already taken corrective action to fix this tax problem with no results, you can try to call the IRS directly. However, many times it is faster and more effective to get tax representation to act on your behalf with the IRS. Whatever you decide to do, take action immediately. Failure to fix your tax problem will result in more penalties and late fees, and if it gets to be too late, the IRS will begin collection actions like a Federal Tax Lien or even a Tax Levy to seize your property in order to collect the back taxes you owe.