The IRS is sending millions of letters
The IRS is sending millions of notices to taxpayers with unpaid taxes. It’s important to watch the mail for any IRS letters this year. If you receive a letter CP14, you generally have about three weeks to respond. It’s important to read and understand the CP14. If the IRS letter says you owe, it could be as simple as missing information or information the IRS has that is not correct.
If you don’t understand the letter, you should find someone trained and experienced to explain it.
It’s important to respond by the deadline shown on the Notice to avoid having your account sent to the IRS collections department.
If you disagree with the CP14, the IRS generally must be notified within 60 days of the date on the Notice.
If you agree with the amount due, you will need to determine which payment method is best for you. By paying in full, you will minimize the penalties and interest charged by the IRS.
Payment can be made directly from your bank account without being charged any payment fees. Payment can also be made with a debit or credit card for a fee. Your tax can also be paid by check by including your Social Security Number, the tax year, and the form number (1040) on your payment.
If you need a little bit more time to pay your tax, you can request a short-term payment plan for up to 120 days. If you need more time, a long-term installment plan can be requested. Payment plans can be set up online, or you can call the IRS to set them up.
More people are self-preparing their taxes online, which can easily lead to errors.
The American rescue plan brought financial relief to many people who were struggling during the pandemic.
The plan gave tax breaks to people paying student loans, reduced taxable income and wages for low-income earners, increased the child tax credit, changed Earned Income Tax Credit rules, and provided stimulus and advanced child tax credit. However, these changes resulted in more complicated tax returns and more errors.
Due to the impact of the pandemic, the IRS had temporarily stopped sending some notices and letters last year. However, the IRS has resumed collection activity.
In some cases, penalties can be abated by using the first-time penalty abatement or abatement for reasonable cause.
It takes time for your payment to be processed by the IRS. If you received an IRS letter and made a payment within 21 days of the date on your CP14, it’s likely that the payment hasn’t been processed yet.
David Zubler is a tax accountant and Enrolled Agent in East Tennessee, providing tax strategies and representing clients before the IRS and has over 25 years of tax experience. He is the author of six tax books and has shared tax advice on national TV. He is the founder and president of Your Tax Care. The company provides business and tax education, including David’s one-minute tax tip radio recordings at YourTaxCare.com. David can be reached at (865) 363-3019 or contacted by email at firstname.lastname@example.org.