The official name of this IRS notice is the “IRS Notice CP11 – Changes to Form 1040 and Amount Due”. This simply means that the Internal Revenue Service (IRS) has adjusted a tax return because of an error that may have been found, which then resulted in a balance due. This type of return mainly covers the accuracy of tax returns that United States taxpayers may have filed for a specific tax year.

THREE POSSIBLE REASONS WHY YOU WILL RECEIVE IRS NOTICE CP11

  • The IRS discovered an error when processing your tax return.
  • The IRS corrected the error and made an adjustment to your return.
  • This adjustment resulted in a balance due.

Millions of taxpayers receive IRS Notice CP11 every year, according to the National Taxpayer Advocate’s Annual Report to Congress for the year 2019. Firstly, we need to clarify what these notice mean and don’t mean. Most taxpayers think that they are being audited when they receive this CP11 Notice. They are not audit notices. Rather, they inform you that the IRS’ discovered a math error or other kinds of error on your tax return for a particular tax year. The notice is actually a “change” to your tax return, generated by the IRS’ computers. It is highly likely that you owe the United States Treasury some more money for that tax year. Anyone can make mistakes. The mistakes made by a taxpayer could be mathematical errors or he or she may have added or subtracted incorrectly. Or perhaps you scheduled incorrectly. All of these errors can make the IRS send you a notice showing the error you made and how to go about it.

Here are a few examples of errors that could be the reason why you receive a CP11 notice. These examples are quoted from the IRS’ Internal Revenue Manuals:

  • A married taxpayer files a separate Form 1040 from his/her spouse under filing status married filing separately, however when figuring the amount of tax on taxable income, he or she enters the amount for taxpayers filing married filing jointly.
  • The mistake could also be an omission of something that is required in order to substantiate something you entered on the return. For example, a taxpayer claims an education credit but fails to attach Form 8863 Education Credits.
  • Another mistake could be taking a deduction even though you don’t meet eligibility requirements. For example, a taxpayer claims an Individual Retirement Account (IRA) deduction even though her modified adjusted gross income exceeds the statutory limit allowable for claiming an IRA deduction.

This means that mistakes made are not only limited to mathematical errors. Remember that this notice is neither a bill nor an audit but it is an adjustment based errors made in tax returns. This adjustment could also be based on information the IRS may have obtained from various third parties. The IRS could audit you later if the situation escalates. These third parties could be banks, your employers, lenders which indicate that you owe more taxes.

Once you receive a CP11 notice, on that notice, you’ll find what the IRS believes you owe for the tax year in question, along with some information on the nature of the miscalculations they found. The next thing that comes to your mind after reading the notice is what you should do. What you do after reading the notice depends on whether you agree with the IRS. If you do agree, just pay the amount owed.

According to the taxpayer advocate report to congress, the notices sent to taxpayers over the years have been examined by the taxpayer advocate and they came up with some issues. They said the notices are “confusing and lack clarity.” Further, the report pointed out that the way the letters were presented, and the way the choices were displayed, impacted how taxpayers viewed and interpreted the letters, ultimately steering them away from exercising their rights to challenge the decision made by the IRS.

WHAT TO DO WHEN YOU RECEIVE A CP11 NOTICE

Here are some points to note when you receive a CP11 notice from the IRS:

  • The first step is to read the CP11 Notice thoroughly. It is important to read the part that explains why the IRS believes there was a miscalculation on your tax return, what changes the IRS has made to your return, and why the IRS believes you now owe money on your taxes. Also note the part of the notice where the IRS suggests any additional steps you need to take.
  • In a case where you agree with the explanation given by the IRS and the corrections the IRS has made to your tax return, the solution to that is to make these corrections on the copy of your tax return that you kept, and to pay the amount owed by the date indicated on the payment coupon that is part of the CP11 Notice you received.
  • In a case where you agree with the explanation given by the IRS and the corrections the IRS has made to your return, but are not able to pay the full amount of tax that you owe, make the corrections on the copy of your tax return that you retained and contact the IRS about setting up a payment plan that helps you pay small amounts incrementally. Victims should also be well aware that interest and penalties will be assessed if they do not pay the full amount by the date on the payment coupon that is part of the CP11 Notice they received.
  • However, if you do NOT agree with the explanation given by the IRS and/or the corrections the IRS has made to your tax return, contact a tax professional, tax attorneys and tax experts to discuss the best strategy for resolving the issue with the IRS. Be sure to do this right away, because the IRS must generally be notified in writing about a discrepancy within 60 days of the date on the CP11 Notice you received. If the discrepancy is not handled properly, your tax return could be referred for audit.

NOTICE DEADLINE–60 days from the day you receive the notice.