IRS Tax Notice Assistance
Received a Notice From the IRS?
Receiving an IRS notice can be confusing, particularly when the notice proposes additional tax, questions information reported on a return, requests additional information, or requires a response by a specific date.
An IRS notice should not automatically be assumed to be correct, nor should it be ignored.
Partnership Tax Advisors LLC assists taxpayers in understanding IRS notices, evaluating the underlying tax issue, and determining an appropriate response.
Understanding What the IRS Is Questioning
The first step is determining why the IRS issued the notice and what action, if any, is required.
Depending on the notice, the analysis may involve reviewing:
The IRS notice or correspondence
The tax return involved
Forms W-2, 1099, Schedule K-1, or other information returns
Supporting tax and financial records
Prior correspondence with the IRS
The IRS's proposed adjustments or calculations
Relevant tax law and reporting requirements
The objective is to understand the underlying issue before deciding how to respond.
IRS CP2000 Notice Assistance
Received an IRS CP2000 Notice?
A CP2000 notice generally means that income or payment information reported to the IRS by an employer, financial institution, business, or other third party does not match information reported on the taxpayer’s income tax return.
The IRS uses its Automated Underreporter program to compare third-party information with information reported on tax returns. When the IRS identifies a potential discrepancy, it may issue a CP2000 notice. Importantly, the IRS states that a CP2000 is not a bill. It is a proposal to adjust income, payments, credits, and/or deductions.
A proposed adjustment may result in additional tax, but the existence of a CP2000 does not mean that the proposed adjustment is necessarily correct.
The taxpayer should carefully review the information and determine whether to agree or disagree with the proposed changes. The IRS permits taxpayers who disagree with some or all of the proposed adjustment to provide an explanation and supporting documentation.
How Partnership Tax Advisors LLC Can Help With a CP2000
The appropriate response to a CP2000 depends upon what created the discrepancy and whether the IRS’s proposed adjustment accurately reflects the taxpayer’s circumstances.
Partnership Tax Advisors LLC can review:
The CP2000 notice
The underlying tax return
Information reported to the IRS by third parties
Forms W-2, 1098, 1099, Schedule K-1, and other relevant information returns
The IRS's proposed adjustments
Available supporting records and documentation
The taxpayer's explanation for the apparent discrepancy
The objective is to determine whether the proposed adjustment appears correct and what response may be appropriate.
Depending upon the circumstances, the taxpayer may agree with the IRS, disagree with the IRS, or agree with only part of the proposed adjustment.
The important point is to understand the underlying discrepancy before responding to the proposed adjustment.
Assistance With Other IRS Tax Notices
Not every IRS notice is a CP2000.
Taxpayers may receive IRS correspondence involving other proposed adjustments, requests for information, penalties, reporting issues, account questions, or other federal tax matters.
Partnership Tax Advisors LLC can assist in understanding the correspondence and evaluating the underlying issue.
Depending on the circumstances, assistance may include:
Reviewing the IRS notice and related tax return
Identifying the issue that generated the notice
Comparing IRS information with the taxpayer's records
Evaluating proposed adjustments
Reviewing supporting documentation
Determining whether the taxpayer should agree or disagree with the IRS position
Evaluating an appropriate response
Assisting with communications involving the IRS
The goal is not simply to answer an IRS letter. The goal is to understand the tax issue and determine an appropriate course of action based on the particular facts and circumstances.
Sometimes the Notice Is Only the Beginning
An IRS notice may reveal an underlying reporting or tax issue that requires additional analysis.
In those situations, the appropriate response may involve more than corresponding about the particular notice. The taxpayer’s return, supporting records, or other tax years may need to be considered depending on the circumstances.
For example, the IRS recommends that CP2000 recipients check prior-year returns and, if the same issue exists, consider whether an amended return should be filed for another affected year.
Identifying the broader issue early may help the taxpayer determine what needs to be addressed rather than responding to the immediate correspondence in isolation.
What If the Notice Results in Tax Owed?
Determining whether additional tax is actually owed and determining how an established tax liability should be paid or resolved are different questions.
If review of an IRS notice ultimately results in an outstanding tax liability that the taxpayer cannot fully pay, additional IRS collection alternatives may warrant consideration.
Those situations can be evaluated separately through our IRS Tax Resolution services, including consideration of an Offer in Compromise (OIC) or Partial Payment Installment Agreement (PPIA) when appropriate.
This distinction allows the underlying tax issue to be addressed first before determining whether a separate collection strategy is necessary.
IRS Experience Matters
Partnership Tax Advisors LLC was founded by Mark A. Silva, EA, a former IRS Revenue Agent and former IRS Headquarters Senior Policy Analyst.
That IRS experience brings an understanding of federal tax administration and IRS procedures to the evaluation of IRS correspondence.
Our approach is to understand what the IRS is questioning, evaluate the underlying facts, and develop a practical response based on the particular circumstances.
Received an IRS Notice or CP2000?
If you have received an IRS notice or CP2000 and are unsure what it means, whether the IRS’s proposed adjustment is correct, or how you should respond, Partnership Tax Advisors LLC can help evaluate the situation.
Contact Partnership Tax Advisors LLC to discuss the IRS correspondence and determine what action may be appropriate