Received a CP 2000 Notice from the IRS. Do not panic. But, by all means respond!
Each year, the IRS computer compares the information reported from third parties on forms W-2, 1098, 1099, etc., with income and deductions reported on your individual income tax return. This is called the Matching Program. If you by chance forgot to report any income, payments, credits, or overstated certain deductions on a income tax return, the IRS may send to you a Internal Revenue Service Notice CP-2000. There will be an IRS telephone number that you can call to ask about the proposed changes that appear on the notice. About 20% of these notices are incorrect, so check yours closely.
The CP notice will inform you of the proposed changes to income, payments, credits or deductions, and the amount due to the IRS, or refund due to you. The first thing you may want to do is to pull out your tax return and verify your tax return to the CP Notice and the information that the IRS proposes to change. If someone has prepared your tax return, send them this notice immediately. Let the preparer do the work for you.
The first page of the CP-2000 is called the Summary Page. It provides a brief summary of the notice and instructions on what you should do to determine if you agree or disagree with the proposed changes. Remember, these are only proposed changes at this time. That’s it, proposed. You will have a time period to respond.
The IRS will point out two things on the CP 2000. The amounts on your original return and the proposed tax changes. The notice will also show the decrease or increase in income. You will also see the name of the payer, their identification number, and the kind of document that was issued that is a W-2 or possibly a 1099. It will also show the Social Security number of the person the document was issued to. The IRS tax liability is computed based on the income changes they find on the 1040 tax return. It can propose additional tax you owe the IRS, or it may show a refund due to you. If you feel the information from the payer is incorrect you should contact them immediately so they can correct their tax record and give the changes to the IRS.
The Internal Revenue Service also put a response page that is included on the form so you can indicate whether you agree or disagree with the proposed changes. You may also authorize any party to represent you in your stead.
Should you agree with the IRS changes, you should sign the response and return it to the IRS. You can pay the amount you owe within 30 days from the date of notice or you may send the signed consent without payment. The IRS will send you a bill for the amount due plus additional penalty and/or interest charges. You may request a payment arrangement to pay the amount you owe the IRS. If you wish to pay in installments, please complete and return the installment request form enclosed in the notice and return it with your response page. You will be contacted later with payment information. If an installment agreement is approved, you will be charged a fee. There are different types of plans the IRS offers, so chose the one that best fits your current financial state of affairs. The IRS Streamline agreement offers you a 5 year period to pay the tax back to the IRS.
If for some reason you do not agree with part or any of the notice, go to option 2 or 3 on the response page, explain why you do not agree in a signed statement, attach the statement and supporting documentation for consideration to the response page and send it back to the Internal Revenue Service. In any IRS correspondence include your day time phone number or cell number with area code and the best time of day to call.
You must respond to the Internal Revenue Service within 30 days of the date of the notice or 60 days if you live outside the United States. Do not miss this time period. If you do not respond on time, the IRS will start sending out notices and follow up with notices of levy.
If the Internal Revenue Service does not hear from you within the 30 or 60 day period, a statutory notice of deficiency will be issued and additional interest will be charged.
The IRS will start the billing process. This problem will not go away. It must be addressed and fixed. The IRS sends out 1.4 million of these notices every tax year.
What happens if you signed your tax return under duress?
If a spouse claims he or she signed the joint tax return under duress or was coerced into signing it, the election to file a joint return may be invalid. In that case, the issue of relief from joint and several liability is not applicable.
The Cincinnati Centralized Innocent Spouse Operation (CCISO) should work the duress issue along with the Form 8857, Request for Innocent Spouse Relief. If only one spouse signs the return, Joint Assessment, One Signature . To establish that a return was signed under duress, it must be demonstrated that:
The taxpayer was unable to resist demands to sign the return; and
The taxpayer would not have signed the return except for the constraint applied by the other party. See, e.g. Stanley v. Commissioner, 45 T.C. 555 (1966); Brown v. Commissioner, 51 T.C. 116 (1968). A signature made involuntarily or under duress is not a valid signature. Therefore, the election to file a joint return is not valid. The individual claiming duress is not jointly or severally liable for liabilities arising from such a return if the return was indeed signed under duress.
The account should be adjusted to reflect a married filing separate return being filed by both spouses.
A married filing separate tax return may need to be secured from the spouse claiming to have signed under duress if a return is required for the period or if the taxpayer may have been entitled to a refund.
A requesting spouse (RS) who raises the issue of duress and later determines he or she would owe more tax if he or she filed separately, may choose not to pursue the issue of duress.
Form 8857 addresses the question of a return signed under duress.
Fresh Start Tax want to make you aware of some of the provisions of Innocent Spouse Relief. In most cases, an Innocent Spouse is usually a “wife” whose husband was not completely honest when filing the tax return. The tax return was presented to her to sign and she signed the return. After a period of time the couple separated or got divorced and the wife found out about other tax issues and a tax liability she was unaware of. The IRS want to now enforce collection of the tax on the wife. Here are the how to’s: 1. How do I request relief?
Answer: File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. You need not file multiple forms. One form can cover multiple years. 2. Where should I file my Innocent Spouse claim? Answer:
Internal Revenue Service
Stop 840F
P.O. Box 120053
Covington, KY 41012 3. What type of documents do I need to submit with the Form 8857, Request for Innocent Spouse Relief?
Answer:You should carefully review the Form 8857, Request for Innocent Spouse Relief, and it will guide you on what documents to submit. For comprehensive information on Innocent Spouse, Publication 971, Innocent Spouse Relief, explains each type of relief, who may qualify, and how to request relief. 4. I want to file, but I am afraid of what my ex-spouse will do, should I still file?
By law, the IRS must contact your spouse or former spouse. There are no exceptions, even for victims of spousal abuse or domestic violence. Therefore, you should consider all options including an Offer in Compromise Doubt as to Liability. 5. How long will the process take?
When a Form 8857, Request for Innocent Spouse Relief, is filed with the IRS, it may take up to 6 months before a determination is made. During the processing time, the Service is requesting your tax information and contacting the non-requesting spouse. By law, the IRS must contact your spouse or former spouse. There are no exceptions, even for victims of spousal abuse or domestic violence.
Refund Inquiries Maybe you can file an Offer in Compromise Question: Can I receive a tax refund if I am currently in a payment plan for prior year’s federal taxes? Answer: As a condition of your agreement, any refund due you in a future year will be applied against the amount you owe.
Continue making your installment agreement payments as scheduled because your refund is not considered as a substitute for your regular payment due.
You may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. You can contact Financial Management Service (FMS) toll-free at 800-304-3107.
The IRS will automatically apply the refund to the taxes owed.
There is a definitive Examination Audit Process that take place with the IRS. Fresh Start Tax wants to educate you about that process. You should also know that we have former IRS Agents that were tax examiners and managers with the IRS. We can get you the best tax settlement possible. we have a total of 100 years direct staff experience in dealing with the IRS. We have the highest rating given by the Better Business Bureau. The Tax Examination Audit Process by the Internal Revenue Service:
The IRS examines and audits tax returns for individuals, businesses, and corporations to verify that the tax reported is correct. 1% of all tax returns are examined by the IRS.
Tax returns that are selected a for examination does not always suggest that the taxpayer has either made an error or been dishonest. In fact, some examinations result in a refund to the taxpayer or acceptance of the return without change.
The overwhelming majority of taxpayers files returns and make payments timely and accurately. Taxpayers have a right to expect fair and efficient tax administration from the IRS, including verification that taxes are correctly reported and paid with enforcement actions against those who fail to comply voluntarily.How Returns Are Selected for Examination How IRS Selects Tax Returns for Tax Audits Computer Scoring.This is the number reason for a tax audit — Some returns are selected for examination on the basis of computer scoring. Computer programs give each return numeric “scores”. The Discriminant Function System (DIF) score rates the potential for change, based on past IRS experience with similar returns. The Unreported Income DIF (UIDIF) score rates the return for the potential of unreported income. IRS personnel screen the highest-scoring returns, selecting some for audit and identifying the items on these returns that are most likely to need review. Large Corporations — The IRS examines many large corporate returns annually. There is a 10% examination rate on these tax returns.
Information Matching — Some returns are examined because payer reports, such as Forms W-2 from employers or Form 1099 interest statements from banks, do not match the income reported on the tax return.1.4 million tax returns are examined from this type of tax audit.
Related Examinations — Returns may be selected for audit when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for examination.IRS runs market specialization tax audits based on certain industry IRS targets for audit. Examination Methods
An examination may be conducted by mail or through an in-person interview and review of the taxpayer’s records. The interview may be at an IRS office (office audit) or at the taxpayer’s home, place of business, or accountant’s office (field audit). Taxpayers may make audio recordings of interviews, provided they give the IRS advance notice. If the time, place, or method that the IRS schedules is not convenient, the taxpayer may request a change, including a change to another IRS office if the taxpayer has moved or business records are there.
The audit notification letter tells which records will be needed. Taxpayers may act on their own behalf or have someone represent or accompany them. If the taxpayer is not present, the representative must have proper written authorization. The auditor will explain the reason for any proposed changes. Most taxpayers agree to the changes and the audits end at that level. Appeal Rights
Appeal Rights are explained by the examiner at the beginning of each audit. Taxpayers who do not agree with the proposed changes may appeal by having a supervisory conference with the examiner’s manager or appeal their case administratively within the IRS, to the U.S. Tax Court, U.S. Claims Court or the local U.S. District Court. If there is no agreement at the closing conference with the examiner or the examiner’s manager, the taxpayer has 30 days to consider the proposed adjustments and their next course of action. If the taxpayer does not respond within 30 days, the IRS issues a statutory notice of deficiency, which gives the taxpayer 90 days to file a petition to the Tax Court. The Claims Court and District Court generally do not hear tax cases until after the tax is paid and administrative refund claims have been denied by the IRS. The tax does not have to be paid to appeal within the IRS or to the Tax Court. A case may be further appealed to the U.S. Court of Appeals or to the Supreme Court, if those courts accept the case.
Taxpayer Rights
The IRS trains its employees to explain and protect taxpayers’ rights throughout their contacts with taxpayers. These rights include:
A right to professional and courteous treatment by IRS employees.
A right to privacy and confidentiality about tax matters.
A right to know why the IRS is asking for information, how the IRS will use it and what will happen if the requested information is not provided.
A right to representation, by oneself or an authorized representative.
A right to appeal disagreements, both within the IRS and before the courts.
Before you go sending in an offer in compromise you should absolutely make sure the offer will be accepted. 75% of all offers in compromise are rejected by the Internal Revenue Service. Few people are qualified to pre-screen offers in compromise for correctness, accuracy, acceptability. Our firm is made up of former IRS Agents who not only worked the Offer in Compromise program while they where employed at IRS, they were the IRS Instructors on the Offer Program as well.
Our company will review your OIC to make sure it qualifies for an Offer in Compromise and also let you know the acceptability chance and what the lowest possible settlement would be. We can also introduce you into other programs the IRS has that might fit your needs just in case the OIC program is not for you. Many individuals find out the they do not qualify for an offer in compromise after the pre-screen process. That is why we develop a secondary fail safe plan as well.
The pre-screening process will simply allow us to review your Offer in Compromise, make comments that might change the acceptability chances on your case. There are so many factors that influence this offer process. Spend no money unless a qualified agent reviews your case.
Fresh Start Tax is one of the premier tax resolution firms in the country. We deal with all types of cases, individuals, business and high dollar corporate entities. We have a staff that specializes in every type of case. Some of our specialties include the following:
Immediate Tax Resolution and Representation for Offers in Compromise
Offers in Compromise and Settlement
Back Taxes/ Unfiled or Never filed tax returns
Bank or Wage Levy Garnishments
IRS Tax Audits
Hardship, part pay agreements
State Sales Tax problems and Resolution
Our company resume:
Our staff has over 140 years of professional tax representation experience
On staff are Board Certified Tax Attorney’s, CPA’S, former IRS Agents, Managers and Instructors.
Former STATE Department of Revenue Manager and Instructor.
We are extremely moral and ethical in ALL our business dealings
We have the highest rating by the Better business Bureau
