IRS Letters, What’s the Deal?
The IRS loves its letters; it’s the primary source of communication for the dreaded national bill collector. Getting any notice in the mail from the IRS usually ties our stomach into knots even before we’ve opened the envelope. Each notice has a different purpose and carries with it its own level of urgency. The Notice of Deficiency (CP3219A) and its predecessor, the CP2000, are two of the least cherished pieces of paper the IRS might send your way. The reason why: it usually means you’re going to owe some money.
Duplicative, Maybe, but don’t ignore!
The reason for these two letters is one in the same: the IRS has been provided information that does not match up with your filed tax return. Consequently, the IRS will send you these notices proposing change(s) to your return, usually resulting in additional taxes being owed, and giving you a chance to respond to the proposal. It is not an official audit. You can agree or disagree. If you do agree, just sign the form and send it back. However, if you disagree you must take advantage of every available option to reconcile the discrepancy. Start by calling the IRS to try to clarify the issue and offer additional information that might help resolve the problem. If that isn’t enough, follow the instructions in the notice and mail or fax a signed statement to the IRS with evidence explaining the reason you disagree with the proposed changes. This needs to be done before the deadline stated in the notice. The IRS will respond to you with its own letter and give you a chance to compare records. Be careful though, the IRS may not agree with what you have to say, and you will not be given an extension of time to file a Tax Court petition while the matter is pending.
You can fight the IRS, but you have limited time to do so
If you don’t have any luck working directly with the IRS and feel compelled to file a Tax Court petition, just remember that a late petition will not be considered by the Tax Court. And if you’re going to file a petition, make sure you have all your records in order and are confident that the IRS’s position is inaccurate. There are a lot of reasons why your challenge could be successful, like bad information was sent to the IRS, you forgot to report something but you have additional information that renders the proposed change ineffectual, or you were a victim of identity theft that resulted in faulty reporting. Not wanting to pay the IRS is NOT a good reason to file a tax court petition; you’ll waste a lot of time and money fighting and will still end up paying the IRS what it said you owed to begin with – just with more interest that had compiled all that time.