The IRS notice CP21A explains that you owe money on your taxes as a result of the changes you requested on your tax return for the tax year specified. Read through the notice to determine if the changes are accurate.  If they are not correct, you need to respond to the notice with necessary evidences as to why you do not owe any additional tax.

Why did I receive the IRS Notice CP21A?

It is very important that you have knowledge of your rights before turning any information over to the IRS. If you have received a CP21A Notice from the IRS, it is normally in response to an amended tax return you filed. The changes in your amended return led to you owing additional tax. If you did not file an amended return, it is probable that someone is using your identity without your consent.

This could have an effect on any Income Tax Audits and Appeals that you are involved in, as well as IRS Tax Litigation or Tax Collections actions.

What to do when you receive a CP21A Notice

  • Read the CP21A Notice with caution, especially the part that explains changes the IRS made to your return. Evaluate the information provided in the CP21A Notice to your amended return to make sure that all of the changes shown in the amended return have been made.
  • If all the changes in your amended return have been made and you concur with the amount owed, pay the amount owed in full by the date specified in the CP21A Notice.
  • If all the changes in your amended return have been made and you agree with the total sum owed but are unable to pay the full amount owed, pay as much as you can and get in touch with the IRS to arrange a payment plan for the remaining balance. Be alert that the IRS can and will most likely will assess interest and penalties on the unpaid balance if you do not pay the full amount by the due date stated in the CP21A Notice you got.
  • If it does not come into view that the IRS made all the changes requested in your amended return, get in touch with your tax preparer or a tax law professional to talk about how best to go on, given the unique facts and state of affairs in your case. Initiate contact with a professional as soon after you receive the CP21A Notice as possible, because you basically have 30 days from the date of the Notice to inform the IRS in writing of your contentions.
  • The IRS uses Notices CP21A to inform you of alterations to your return. The most general Notices are the CP21A and the CP21E but the CP21B, CP21C & CP21I are used as well
  • You need to review the items listed on the Notice CP 21A to ensure if the items listed are in fact exact. CP 21A are often wrong and the items are listed on the return. Sometimes the narrative of items is different enough to be picked up in the matching process.
  • The CP 21A is neither a bill nor an audit. It is a proposed adjustment due to issues.   Sometimes the information supplied to the IRS is in error.

The IRS could still audit you as a result of your response.

Be exceptionally cautious in how you respond. The information supplied can either make matters better or extremely worse. You are supplying information that will be review by a Compliance Officer. That person’s job is to confirm that the information supplied resolves the outstanding issues listed on the CP 21A.

The Compliance Officer can make an audit referral if he or she thinks the information creates more concerns than it explains.

The usual method of handling a Notice CP21 is to either:

  • Reply in writing to the IRS at the address listed on the notice, or
  • File an amended return addressing the items questioned by the IRS in the Notice CP 21A. An amended return is typically filed since that initiates a process the IRS must follow.  Letters are often misunderstood or lost by the IRS.

Warning: filing an amended return starts new restrictions periods for audits, collections, bankruptcy, etc. So cautiously weigh your options.

What is your first step?

If you received a letter or notice, a choice has to be made.  Do you feel certain to handle this situation on your own?  If it is an easy issue and you already know the answer, call or write them. If the issue is more complex, you need to engage a Certified Tax Resolution Specialist. The IRS or State will take full advantage of your lack of knowledge and experience.

What is the Next Step to Take?

The next step is to establish if the notice was sent in error.  Do you have an outstanding tax liability?  Do you have unfiled or incomplete returns?

Is There a Time Limit?

Yes, each letter or notice from the IRS or State will show a date that you MUST make contact with them by.  If you need extra time, call the number on the notice or letter and request an extension.  DO NOT ALLOW the time to expire without contacting them or hiring a representative to contact them for you.

What You Don’t Want to Do!

What you don’t want to find yourself doing is nothing.  Your tax problems will only get worse if you ignore them.  If you cannot pay, there are a number of probable solutions available to those who are otherwise in compliance.  In compliance means having all tax returns filed and any balances paid or on a payment plan.  If you have outstanding debts or unfiled returns, you need to hire a Certified Tax Resolution Specialist.

Get Some Assistance

  • If you don’t know how to address the issue(s), have unfiled return/unpaid balances or just done feel confident, let the experts represent you.  Work with the tax professional or experts to resolve your issue(s) quickly.  Best of all, you don’t have to talk to the IRS or State; they can speak on your behalf.
  • Stop the stress and resolve your problems by meticulously choosing your tax specialist.