I can tell from the letters piling up on my desk: it’s officially correspondence season! Correspondence season is the term that tax professionals use to describe the period after tax season officially ends. Many taxpayers think that the Internal Revenue Service (IRS) takes a break just after tax season, but that’s not the case. As the IRS processes tax returns, their systems are hard at work processing tax returns, matching taxpayer data, checking for missing information and the like. The result? Those bills and notices that show up in your mailbox.
Here’s what you need to know.
First, those bills. The IRS recently advised that they’re sending out tax bills to taxpayers who filed on time during tax season but didn’t pay in full. The letters or notices are usually mailed in June and July and arrive within a few weeks. These include CP14 and CP501 notices which signal to taxpayers that they have a balance due.
If you owe, you have several options. You can pay the traditional way – by cash, check, money order or credit card. You can also pay your taxes directly from your checking or savings account by using Direct Pay or Electronic Funds Withdrawal (EFW); you can also use the Electronic Federal Tax Payment System (EFTPS) to pay by phone or online. If you’re out of the country, you can pay with an international wire transfer. And if you’ve gone paperless, you can pay your tax bill using PayPal, Samsung Pay, or Android Pay through an IRS-approved payment processor. For more on paying your tax bill, click here.
Those options assume that you have the money to pay your tax bill. If you can’t pay your tax bill in full, consider an installment agreement or check out these options.
You may also find one of the more popular notices during correspondence season: Notice CP2000. It’s sometimes referred to as an audit letter, which sounds scary, but it’s not as bad as it sounds. The purpose of the CP2000 is to propose a change in tax. Typically, a CP2000 shows up when income reported from third-party sources (like your employer) does not match what you entered on your tax return. For example, if your form W-2 indicates that you earned $25,000 in wages, but you reported $24,000 on your form 1040, you’d likely receive a CP2000. It’s important to read the notice carefully because it provides instructions about what to do next.
Another standard notice is CP3219, Statutory Notice of Deficiency (more commonly referred to as a 90-day letter or Notice of Deficiency). If you don’t respond to the CP2000, or if the IRS doesn’t agree with your explanation in response to the CP2000, they’ll send you a Notice of Deficiency, which explains the proposed changes to your taxes and how the agency arrived at that decision. The notice also informs you of your right to petition the United States Tax Court if you don’t agree with the changes.
(You can find out more about a Notice of Deficiency and the process of contesting the notice here. You can find out more about Tax Court here.)
For more on how to respond to your notice, click here.
Of course, with these notices going out, you’ll want to be on the lookout for tax scams. If you receive a CP2000 notice – or other correspondence – and you’re not sure if it’s valid, you can always reach out to the IRS directly (try calling 1.800.829.1040).
If you need help understanding your bill or notice, or if you need more information about what your options might be, you’ll want to reach out to someone. Help may be available through the IRS taxpayer assistance center, or check with your tax professional.