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Standing Up to the IRS
From the editors at WIFE |
When you received a plain brown
envelope marked "Official US Business" from the Internal Revenue Service,
it’s enough to strike terror in your heart. Your first instinct to the deficiency
notice inside might be to pay them whatever they want, but don’t do it. There are
four common notices that you might receive from the IRS.
1. The Math-Error Notice tells
you that you made a mathematical error on your tax return, or you used the wrong tax
tables. But those notices often result from keypunch errors at the IRS, resulting in a
correct return appearing to be erroneous.
2. The Late-Filing Notice
is generated if you miss the tax-filing deadline, which is April 15 for most returns. If
you received an extension for filing, the IRS may not be correct when they assess
penalties for late filing.
3. The CP-2000 Matching
Notice is a notice that the 1099 forms and W-2s filed by your employer, bank, broker,
and mutual funds don’t match the information on your tax return. But this notice can
result if you reported the income elsewhere on your tax return, for example, commissions
reported as "other income" rather than "business income." It can also
result if the payer has used your social security number in error.
4. The Estimated Tax Notice
assesses a penalty if your tax payments during the year are less than 90% of the total tax
due on your return. But there are several exceptions to the estimated tax rules, for
example, generally you are exempt from penalty if you paid at least as much in estimated
tax this year as last year’s total tax bill. If you qualify for one of those
exceptions, it’s up to you to notify the IRS that their assessment notice is wrong.
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