CP23 notice is a familiar form letter sent to taxpayers by the IRS. They usually include a balance that is due to the IRS. In a confused state, the client gets in touch with a tax professional to understand why they may have received this notice.
A most likely reason you got the IRS CP23 is because the IRS noticed a difference between the amount of approximated payments you reported on your return and the sum of payments that they received for your account. This notice may also reveal some changes the IRS made while processing your return. The IRS will inform you of these changes that were made, as well as the amount you due the changes.
To fully understand your notice, review the changes the IRS has made on your tax return. The IRS CP23 Notice includes a billing summary breaking down the amount of taxes owed, payments made, failure to pay penalty, interest charges, and the amount due by specific due date.
In the IRS CP23 notice, the IRS will explain the changes done to your tax liability. If still unsure of these changes, review any recent changes to the tax law or regulations in your area to have a better understanding. The next step is to gather any additional information to help you better understand it. Fill out the contact form at the bottom of the page, and our tax professional will help you review the IRS guidelines.
Ensure to open your CP 23 IRS Notice right away and read carefully. It will give you a breakdown on how much you owe on your taxes. Make sure to match up the payments the IRS applied to your account with your personal financial recodes. Pay the balance due by the date written on the notice, and revise your personal tax return copy with the new changes. If you do not agree with the notice or need to make alternative payment arrangements, make contact with the IRS with the toll free number given on the top right corner of your notice.
The IRS makes use of Notice CP23 to inform you of changes to your return because of a mistake in estimated tax payments and you have a balance due.
The first move to take is to make a confirmation that all your estimated tax payments are listed and then to confirm the amount that has been applied from a prior year if valid.
At least, review your payments to the IRS and see if you agree. The IRS may have omitted or misdirected some of the payments. Take caution on what you say and send to the IRS. These will be used against you. Also, after you reply to the notice of the IRS, don’t be surprised if you get a Letter 86C transferring the file to another office or a Letter 2645C asking for more time. But, you must maintain contact and ensure not to rely on the IRS
The answer to this has to do with payment allocation. The typical candidate for this type of notice falls into numerous categories:
Essentially, what should be understood here is the IRS is disputing the amount paid in for estimated taxes. Because this can be confusing, the client could complain that he sent money to the IRS with a bank statement and a cleared check as proof.
The issue usually is not that the payment was not sent – the problem normally is that the payment was applied to the wrong time. Often, taxpayers will login online to pay their 2019 taxes in Jan of 2020, but during the drop-down prompt process on the IRS website they will opt for 2020 instead of 2019. Therefore, their payment is billed to the incorrect year.
This is also a common situation when a taxpayer is filing multiple years of back taxes & making payments on the IRS website. It is very easy for non-tax professionals not to get this right.
Another case of this type of error occurs when mailing quarterly checks. The taxpayer may not have knowledge which address to send the payments to, causing delays, or otherwise does not submit the correct information at the time of mailing the check. The correct information should include:
This is also common for taxpayers or preparers using software packages that pre-suppose estimated tax compliance based on prior year returns. Some professional packages are known to set up preparers and their clients for this error by computing and carrying forward these amounts to next year. When the preparer files, unless they have particularly evaluated line 65 or 70 on form 1040, the client will receive that notice. It can also be created due to a mix-up of estimated payments between the client and tax professional.
The IRS offers you 60 days from the date on your IRS CP23 Notice to contact them on anything you seem not to agree with. You can contact them by using the toll free number given on the top right corner of your CP 23 IRS Notice.
If you agree that the notice is correct, you will need to pay the amount you owe on or before the due date that is listed on the notice. If you cannot pay the full amount, you can make part payments. You may also decide to correct the copy of the return you have and save it for your records.
If you do not agree with the changes made on the notice, you will need to get in touch with the IRS within 60 days from the date on the notice. You can contact them by phone by calling the number on your notice or by mail.
Contact the IRS by making use of the toll free number given on your notice, and make sure to have the documentation and other relevant information to support your claim.
The IRS will issue you a late payment penalty if you are unable to pay the full amount by the date it is due. You can put a call through to the IRS using the toll free number provided on your CP 23 IRS Notice, and if your financial situation qualifies you, they may abate your penalties. The IRS will also consider you for penalty abatement if you can provide evidence that you did not pay the taxes on your specific notice on time because of situations you couldn’t handle.
The IRS will accrue interest on the liability if you do not pay the amount in full before the date on your CP 23 IRS Notice. Interest will be charged on any outstanding balances after that date.
In short, the IRS wants the taxpayer to respond to the notice in a timely manner. As mentioned in the beginning of the page, the taxpayer must review the notice carefully, collect any relevant documents, and then respond back to the IRS either agreeing or disagreeing with the letter notice.
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