An IRS notice CP22E is a notice you receive from the IRS due to a recent audit on your tax return and it states that you owe a balance and the value of said balance. The IRS is saying that you were audited by them, changes were made to your tax return, and now, you have a balance on your taxes which occurred as a result of this. Taking a quick look at this, it can seem worrying. After all, the main motive for doing taxes accurately is to avoid being audited and making sure you are paying or receiving the exact amount. This letter is very alike to notice CP21E. It follows an audit report, and explains the changes made to your tax return. It also provides an amount you owe based on the audit.
However, if you cannot pay the balance in advance, know that there are other options. If you think the information provided to be mistaken, you can legally dispute the notice. And, if you are looking for tax audit help, there are plenty of avenues available. Understanding your CP22E might take a bit of research and study but it should not be a complicated process.
What Should I Do?
As with any IRS notice, it is important to note that it should not be left unread. Being that this notice is generated by result of an audit, this occurrence is ever more apparent. The steps you must take to handle the audit adjustment go as follows:
- Read the Notice Carefully
It can be presumed that you were informed of the audit, being that an audit notice should have come before the CP22E. This is not always the case. But now that the process has been concluded, and the IRS has decided on an outstanding balance, you must ensure you read the document with care to ensure no errors were made on their part. Just because it is an audit does not mean the IRS is perfect.
Once you have read through the notice and had a full understanding of the information, you can then know whether what they are proposing is actually accurate.
- What if I agree with the notice?
If you happen to agree with the information on the notice, then you must pay it within the stipulated timeframe, usually is this is 21 days. This can be done via money order, check, or (in some cases) online. Once you received the payment and you have agreed, in writing, to the ‘proposal,’ the case is closed. If you happen to be in a situation where you agree with the notice but do not have the financial means to settle the matter, then you can make inquiries about an IRS payment plan. Afterwards, you should:
- What if I disagree with the notice?
If you seem to have some misunderstandings with the information proposed, you can then request audit reconsideration. This is best achieved with audit representation but can be DIY as well. Audit reconsideration should only occur if the outstanding balance has not been paid. If you’ve already paid the due amount, then use Form 1040X to submit an amended US individual income tax return. It is essential to respond to the notice immediately, or the liability will become final.
You will then need to make (in either case) the necessary documentation that supports your position available. This could be forms like W2s, 1099s, or the likes of. From the nature of audits, if you happen no to agree with your CP22E notice then it is highly important that you hire a tax professional. There are experts in the field that specialize in tax audits.
- I Want to Pay, but Can’t
If you realize that you are in a position in which you know you are responsible for the amount due but cannot pay it, then take a look into an IRS debt settlement plan. If your balance due is less than the sum of $50,000 then the process is very much simpler. In fact, if you are below the $50,000 bracket, it is often advised that you call the number on your CP22E notice and reach an agreement upon an installment agreement with the IRS representative.
Finally, if you cannot afford to pay any portion of the tax, there are other tax resolution alternatives that could, at the very least, put off the debts until you can afford to pay them. Even an ‘offer in compromise’ might aid in rectifying the situation and reduce the balance.
Again, for complex IRS matters, you may want to seek the advice of a professional.
- What happens if I Don’t Pay?
The very least you can do is to respond to the CP22E notice within the timeframe of the given deadline. However, if you fail to pay, then your debt will accrue interest and penalties. The IRS will sum these to the total value of what is owed. If the debt continues to go unpaid, the IRS can take more action resulting in liquid asset seizure, bank account seizure, and claiming your existing income.
Being that the CP22E notice is as a result of an already-processed audit, you cannot ignore the debts owed, or the IRS will surely pursue the case. But if you keep in touch throughout the process, then the IRS will work with you towards getting a solution.
- What If My Spouse Did This?
If the audit was due to information that your spouse withheld the notice from the IRS without your consent or knowledge, then you may be considered for innocent spouse relief. This commonly happens in marriages where one partner is trying to avoid paying their full income tax. If you fall under this category, then you can file Form 8857, Request for Innocent Spouse Relief, within two years of the date the IRS issued the CP22E.
The IRS understands that this can be the fault of one party and, if that is the case, will not hold both spouses liable. If you have more inquires regarding this form, the IRS recommends that you refer to Publication 971, Innocent Spouse Relief.
Conclusion
Notice CP22E is simply a notice provided by the IRS, after an audit that declares you have an outstanding IRS tax balance. These notices can arise by mistake and do not always come with an original audit warning. If you have any doubt as regards the information, you have the right to appeal the notice.
Finally, ensure to review the notice carefully and respond within the deadline provided. Failure to do so will attract penalties and interest.