IRS Notice CP22H

Receiving an IRS notice CP22H in the mail can feel like a punch to the gut. This means the IRS changed something on your tax return related to your Shared Responsibility Payment, and now you owe more money. What should you do?

It’s easy to feel overwhelmed when you see “IRS CP22H”. This notice uses complex tax jargon, and not many people know how to handle this type of IRS issue.

This situation might be from you not realizing how to calculate this properly when completing your tax return. You’ll learn how to understand the CP22H notice and address the problem.

Table of Contents:

• What Triggers an IRS Notice CP22H?
  • Understanding the Shared Responsibility Payment (SRP)
  • Changes to the SRP After 2018
• What to Do When You Receive a CP22H Notice
  • Agreeing with the IRS Assessment
  • Disputing the CP22H Notice
• How Penalties and Interest Work with CP22H
  • Calculating Penalties
• Setting Up an Installment Agreement
• Common Questions About CP22H Notices
  • What if I didn’t receive Form 1095-A?
  • How do I know if I qualify for an exemption from the Shared Responsibility Payment?
  • What’s the difference between a CP22H and a CP2000 notice?
  • Should I consult with a Tax Professional?
  • I have already paid this bill and continue to get letters. What should I do?
• Conclusion

What Triggers an IRS Notice CP22H?

Several things can trigger an IRS notice CP22H. The most common is that the IRS gets information that changes your Shared Responsibility Payment (SRP) calculation.

Maybe your income changed, or you claimed the wrong number of dependents. It could be that your information didn’t get fully updated when you made the updates to your account.

Whatever the reason, this notice means the IRS thinks you owe them more money. This could also include an estimated tax payment.

Understanding the Shared Responsibility Payment (SRP)

Before 2019, the Affordable Care Act (ACA) required most Americans to have health insurance. If you didn’t have coverage or qualify for an exemption, you had to pay a penalty called the Shared Responsibility Payment.

This payment was calculated based on your household income and the number of people in your household. There are multiple ways and points where it must all align.

For 2017, the payment was the greater of a flat fee of $695 or 2.5% of your household income above a certain threshold. The maximum family payment was $2,085.

Changes to the SRP After 2018

It is important to know that starting in 2019, the penalty for not having health insurance went to zero. If you’re getting a CP22H notice now, it’s likely for a tax year *before* 2019.

The IRS is still working through tax returns for many tax years ago, often 5 or 10 years back, that involved the SRP. Don’t rely on outdated information.

Make sure what you’re referencing applies to your situation, as not everything on the internet is accurate. Pay attention to your letter, and be sure you are reviewing accurate, up to date information.

What to Do When You Receive a CP22H Notice

First, try not to freak out, although you may have that initial shock. Many people get these notices, and it doesn’t necessarily mean you did anything intentionally wrong.

Read the notice closely. The IRS always includes detailed information about the balance, what triggers it, and what next steps you should take.

Understand what the IRS is saying. Compare the information in the notice to your own tax records.

Agreeing with the IRS Assessment

If, after reviewing your records, you realize the IRS is right, you need to pay the amount due. The notice will tell you how much you owe and by what date.

You can pay the full amount. Otherwise, explore payment options, if you can’t pay in full, such as with direct deposit.

You might be able to set up an installment agreement with the IRS to make monthly payments. Consider filing Form 9465, Installment Agreement Request, but first review the details.

Disputing the CP22H Notice

If you still think the IRS is wrong after checking your records, contact them immediately. The notice provides a phone number on it, and often that is the best contact information.

Explain clearly why you disagree. Provide any documents that support your case.

Always keep copies of all tax-related information you submit or receive from the IRS. This is very important for making a legitimate defense for your situation.

How Penalties and Interest Work with CP22H

Even if the underlying issue is the SRP, you *can* still face penalties and interest. Here is how things work.

While there are no specific penalties for not paying the SRP itself by the due date, any *other* unpaid tax balance on your return is subject to failure-to-pay penalties and interest. Those parts that do accrue, continue to pile up on top of themselves too.

Think of it this way; If the CP22H says you owe $500 more because of a miscalculated SRP, that $500 won’t have a failure-to-pay penalty. But if your total tax liability was, say, $1,000, and you only paid $500 because you thought you didn’t owe the SRP, that other $500 *will* accrue penalties and interest from the original tax return due date.

Calculating Penalties

The failure-to-pay penalty is generally 0.5% of the unpaid taxes for each month or part of a month the taxes remain unpaid. It stops counting for your total tax balance, however it is important to resolve it because it can grow quickly.

There is often a maximum threshold amount to penalties that applies, which can be complex. Interest is also charged on both the unpaid tax and the penalties.

The interest rate changes but is generally the federal short-term rate plus 3%. These percentages really add up over the years.

Setting Up an Installment Agreement

If you can’t pay the full balance shown on your CP22H notice, consider an installment agreement. This allows you to make monthly payments over time.

Setting up an installment agreement keeps you in good standing with the IRS. It does not stop interest from accruing.

It can lift the stress of this. Paying something helps improve the problem.

Common Questions About CP22H Notices

Below are common questions that come up about the IRS and their notices:

What if I didn’t receive Form 1095-A?

Even if you didn’t get this form, you’re still responsible for reporting your health coverage. You might need to gather other documents, like insurance cards or statements. Reach out directly to your marketplace, in case you need support from them.

How do I know if I qualify for an exemption from the Shared Responsibility Payment?

There are many exemptions. The instructions for Form 8965 list all the details.

Common ones include things like:

• Short gaps in coverage.
• Certain hardships.
• Membership in specific groups like religious groups or tribes.

You will have to gather your paperwork. Do keep a record of all tax documents.

What’s the difference between a CP22H and a CP2000 notice?

A CP22H specifically deals with changes to your Shared Responsibility Payment. It’s directly based on the documents on your filed return. A CP2000, however, is a more general notice used when the IRS finds a mismatch between the income reported on your return and the information they received from other sources, like employers or banks.

Should I consult with a Tax Professional?

It depends on your specific situation and level of comfort with the IRS. The SRP has complex formulas and the forms associated can be challenging.

If you are going through a hard time, that’s the best time to reach out for help. Get help from a tax attorney. It is important to get a grasp on these kinds of tax situations.

I have already paid this bill and continue to get letters. What should I do?

First review your records to confirm payment was properly processed by your bank. If you find an error, such as a processing delay, then be sure to send confirmation proof of the payment being submitted by you to the IRS. If all else fails, request help from a Tax Professional.

Conclusion

Dealing with an IRS notice CP22H can feel like navigating a maze, but understanding the notice is the best thing to do. You now understand what it is, why you might get one, and how to handle it.

Remember, this notice relates to changes in your Shared Responsibility Payment. Knowing this, helps give you confidence when contacting the IRS.

Carefully read everything that was sent to you by the IRS. If you did everything right and they still come after you, reach out to a tax professional to help defend your position, especially if there is any risk of tax fraud or a trust fund recovery penalty.

IRS Notice CP22H – Adjustment to Your Shared Responsibility Payment means that the IRS made the changes you requested to your tax return for the tax year on the notice, which also changed your shared responsibility payment. In making an adjustment to your Shared Responsibility Payment, it has resulted in a balance that is now due. This type of notice is under the “Unpaid balance” category.

REASONS FOR RECEIVING THE CP22H NOTICE

Here are the possible reasons why you received IRS Notice CP22H:

• You filed a tax return with the IRS.
• The IRS made a Shared Responsibility Payment (SRP) adjustment to your return based on information it received that resulted in a balance due.
• The IRS sent Notice CP22H to inform you of the adjustment and the resulting balance due for that tax year.

WHAT YOU NEED TO DO WHEN YOU RECEIVE NOTICE CP22H

As usual, the first step is to read the notice CP22H sent to you and understand what was sent. If you know your taxes well, you may not need guidance. However, if you have no idea what the IRS means, you can contact the IRS directly using the phone number provided on the top right corner of the notice or you can consult a tax professional to assist you or contact the IRS on your behalf. If after you have understood the message and you disagree with what the IRS sent, you will still need to contact the IRS for clarification. Obviously you will need to provide them with information about your tax returns. This is why it is important to always keep your tax documents safe for future references.

On the other hand, if you agree with what the IRS sent, you will see a balance due that you are required to pay to the IRS. According to the IRS, If you don’t pay your tax in full when you file your tax return, you’ll receive a bill for the amount you owe. This bill starts the collection process, which continues until your account is satisfied or until the IRS can no longer legally collect the tax. In this case, what caused you to have a balance due is the fact that changes were made to your Shared Responsibility Payments (SRP). This notice CP22H explains the balance due and demands payment in full. It will include the amount of the tax, plus any penalties and interest accrued on your unpaid balance from the date the tax was due. If you can’t pay in full, you should send in as much as you can with the notice and explore other payment arrangements.

NOTICE DEADLINE –The deadline is specified on the notice

If you know you will not be able to pay the entire tax balance due when you file your tax return, you can file a Form 9465, Installment Agreement Request with your tax return to request a payment plan. If you have already filed your return with an unpaid balance due, you can send the Form 9465 on its own.

Installment agreements are monthly payments you make to the IRS when you are unable to pay your tax debt immediately or before the deadline given in the notice. You will need a tax professional to help you choose the best possible agreement that will allow you to complete your tax debt comfortably. The installment agreement the Internal Revenue Service (IRS) decides to give you depends on your circumstance, how much you owe and how fast you can complete the payments.

SHARED RESPONSIBILITY PAYMENT

According to the Internal Revenue Service (IRS), the individual shared responsibility provision of the health care law requires you, your spouse if you file a joint return, and your dependents to have qualifying health care coverage (minimum essential coverage), qualify for a health coverage exemption, or make a shared responsibility payment when filing your federal income tax return. The annual payment amount is either a percentage of your household income in excess of the return filing threshold or a flat dollar amount, whichever is greater.

Usually, if you do not have health care coverage that meets the criteria for minimum essential coverage or qualify for an exemption, you will need to calculate your shared responsibility payment when you file your tax return. For 2017, the payment was a flat fee of $695 or 2.5% of household income (whichever was greater) less the filing threshold which was $10,350 for 2017 for a single individual. The family maximum payment for 2017 was $2,085. The IRS also made it known that household income includes income from all family members claimed on the tax return including dependents. If you are not required to file a tax return because your income is below the filing threshold, you are automatically exempt for that year.

If you are unable to pay the shared responsibility payment (SRP) in full when you file your return, you can request an installment agreement to make monthly payments on the balance due. There is no failure to pay penalties for not paying the SRP by the due date and the IRS cannot file a tax lien or levy for an unpaid SRP balance. However, failure to pay penalties will still apply to any non SRP portion of an unpaid balance you cannot pay by the due date.

The federal health care law known as the Affordable Care Act (ACA) required all Americans to have health insurance for tax years before 2019. Then, if you did not have health insurance, you must get an exemption from the requirement to buy coverage, or wind up paying a tax penalty. The law says citizens, employers and government share the responsibility of keeping everyone covered, so the penalty for going without insurance was dubbed the “shared responsibility payment.”

This means that before 2019, if you had an exemption, you did not have to pay the shared responsibility penalty even if you didn’t buy health insurance. From the beginning of 2019, it was said that there will be no penalty for not having health insurance.