Are your Taxes Summer Ready?
Just because tax refund season is over, it doesn’t mean that taxes are done. The summer is when the IRS usually sends notices to taxpayers to resolve issues preventing your account from good standing. Below are three Summer notices to watch out for from the IRS.
You may not know it, but the IRS is constantly reviewing returns to see if all income is being reported due to the submission of tax information statements such as (W-2, 1099 ,etc.). The IRS sends a notice called a CP2000 if there is a mismatch. Within each notice, there is a list of missing items and discrepancies and proposed additional tax, penalties, and interest.
Fun fact, the CP200 usually won’t question the return you just filed. Instead, it questions only previous returns. This is also why we always recommend that good preparation and storage comes into play for old tax forms, filings, and receipts. The IRS claims that each occurrence averages out about $1,600 dollars of additional tax owed, not including the 20% accuracy penalty on top of the tax. The accuracy penalty may be contested if there is just cause.
Refund hold/Offset Notices
Those who usually file before April are those who anticipate a refund. In some occasions, outstanding obligations and governmental debt results in a frozen refund. These issues can range from overdue child support to the default of student loans. The best remedy is to find a way to address those holds to prevent them from reoccurring.
A hold could even result from the IRS suspecting that the return is fraudulent or another issue which has arisen from an unresolved issue from prior years.
A little less than 10 percent of the total number of taxpayers owe a balance when they file their taxes. About fifteen percent of those who owe can’t pay what they owe. If a payment plan is not arranged, then the IRS sends an assortment of elevated notices throughout the summer, beginning in June. The first one is called the CP14 and the next four will arrive about a month a part. If these notices are ignored. The IRS will move to collection after the last notice, titled “Intent to Levy.” You can get an extended time period to pay (120 days) or an online payment plan if you owe less than $50,000. For those who owe more than $50,000 or have hardship instances, the IRS must be contacted to make arrangements.
The tax business doesn’t cease just because summer is in full swing with vacations and travel. Do not ignore or forget the implications from receiving these notices from the IRS. This usually always leads to tax liens and levies which may impact your business, your customers, and your own finances.
Have a full summer planned out and received one of these notices? Contact us to help you resolve these issues with the best outcome.