How to Respond to IRS CP2000 Notice?

IRS CP2000 Notice

The IRS can send many notices to your house that were uncalled for, and they could be confusing and stressful to look at. These notices can go over your head because of the tax forms they are referring to and the unending due dates. Here is a complete guide of what one of these notices mean and how to handle IRS CP2000 notice.

What is a CP2000 Notice?

IRS CP2000 Notice

The IRS will send you a CP2000 notice if the income they have on file does not match the income you reported on your tax return. The IRS checks your tax return income against Forms W-2 and 1099 and will give you a notice if your income does not match. CP2000, or underreporting inquiry, is the name of the notice.

This notice primarily concerns taxes and penalties that you may owe as a result of missing or misleading income on your tax return. The IRS can also challenge deductions and credits on your return if they don’t match the income statements you filed under your Social Security number. It’s also possible that the IRS’s information to match your return is incorrect. Because CP2000 notices are computer-generated, there’s a good chance the notice was simply a robot error. There have been numerous instances where the IRS issued a CP2000 notice to a taxpayer and did not receive any funds due to an error.

How to Handle an IRS CP2000 Notice?

Follow the steps below to obtain the correct solution and avoid making any other mistakes:

IRS CP2000 Notice
  1. Assess the situation:
    Before you take any action, you must first assess your situation and begin confirming your unpaid taxes. You must check to see if the income you stated on your tax return is correct. Gather all the documents and statements you have access to under your Social Security Number first. These documents could include your W-2s, 1099s, and any other documentation you have. Compare these documents and forms to your tax return in detail, paying special attention to any lines where you might have made a mistake.
    ~
  2. Contact the Internal Revenue Service (IRS):
    You can then send an IRS response based on the conclusions reached during the analysis process.

    If you agree with the notice and acknowledge that you made a mistake, you can send the CP2000 response form to the IRS along with your tax payment. If you are unable to pay the whole amount owed, you can request IRS Payment Plans and Agreements. If you disagree or just partially agree with the IRS CP2000 notice, you must send all relevant documents and forms to the IRS to prove that the IRS made a mistake and sent the incorrect notice. You can also mail a corrected return, along with all other forms and papers, with the help of a Miami Tax Accountant. Any penalties you may be facing can also be addressed in your response. If the IRS rejects your response, you have the right to appeal.
    ~
  3. Closing the Case:
    Call the IRS to confirm that the case is closed after a few weeks of your response. To be sure, go over all your prior year’s statements and returns to be sure you haven’t made any other mistakes.

How to Get Expert Help?

Find a Miami tax accountant who can assist you in determining the cause of your CP2000 notice and communicating with the IRS on your behalf so that you don’t have to. For any of your IRS issues, seek assistance from a reputable tax accountant in Miami.

SDG Accountant is the best option for all your tax and accounting needs in Miami. We are a cross-border accounting and tax firm that offers a wide range of services. We are the best solution for everything from bookkeeping to expatriate tax!

Request A Consultation Now

IRS Payment Plans and Agreements

The IRS offers a variety of payment plans to help taxpayers pay off their back taxes. These programs differ; you may receive a free installment plan or a pricier one. See below for more information on the various types of IRS payment plans and how you can benefit from them.

What is the IRS Payment Plans?

An IRS payment plan is an agreement between the IRS and the taxpayer to pay the taxes outstanding within a specific time frame. The IRS offers these plans to taxpayers who have owed taxes for up to ten years and provides them with a period and payment plan that is appropriate for their eligibility. IRS payment plans are classified into two types: short-term payment plans and long-term payment plans.

These payments are often made monthly for a fixed amount. If the arrangement is for more than 120 days, there is also a setup cost. The IRS offers several options for applying for these payment arrangements. Here is how to apply:

IRS Payment Plans
  1. Online Payment Agreement Application: The Online Payment Agreement application is the first and most convenient way to apply for an IRS Installment Agreement Plan. If the total combined amount of all your individual income tax, penalty, and interest owed is $50,000 or less, there is no setup cost for the online application. On the application, there are short-term payment options for 120 days or fewer, as well as monthly payment plans. This application is also available for businesses that owe less than $25,000 in total payroll taxes, penalties, and interest for current or previous tax years. When you apply for the Online Payment Agreement Plan, you will receive an immediate response from the IRS. It will immediately inform you whether your application was approved or denied by the IRS.
    ~
  2. Application by Phone: You can also apply for payment plans over the phone. To apply over the phone, dial 1-800-829-1040. If you apply by phone, the IRS may request proof of your financial situation. Make sure you have all your documentation and financial information ready before calling.
    ~
  3. Application by Mail: You can also apply for a payment plan by mailing the IRS the necessary documents. For the application, you must submit Form 9465 to the IRS. In addition, if you want to deduct your payment through payroll, Form 2159 is required. If you owe more than $50,000 in total, you must file Form 433F. All these forms must be mailed to the IRS address listed on your bill. The IRS allows applicants who apply by mail to reduce the accrual of fines and interest by making voluntary payments until their application is granted.
    ~
  4. Application In-person:  The final option for applying for the Installment Agreement Plan is to visit an IRS office in person. You must bring all your documentation and have access to your financial information for the in-person application.

When it comes to the various plans that you might apply for, the short-term payment plan is a 180-day or shorter arrangement. This plan is free if you apply online, via phone, by mail, or in person. The highest amount you can owe the IRS under this plan is $100,000, which includes tax, penalties, and interest. Moving on to the long-term plan, the agreement can be for 120 days or longer. This package has various setup fees based on the payment type you pick. If you pay by automatic withdrawal, it costs $31 to apply online and $107 to apply by phone, mail, or in person. These costs change if you pay through a different method: applying online costs $149 while applying by phone, mail, or in-person costs $225. Keep in mind that if the applicant is considered low-income, these charges will be reduced.

How to Seek Professional Help?

IRS Payment Plans

Back taxes can be the most stressful and daunting scenario to deal with. It would take hours of research and a lot of effort to fill out all those paperwork in order for you to come up with a payment plan and choose the best possibilities. The best choice is to hire an experienced Miami Tax Accountant to complete all these forms and advise you on the best payment plan.

SDG Accountants is a tax and accounting firm located in downtown Miami, and we are the top tax accountant in Miami for all your tax and accounting needs. We help small businesses and individuals expand their businesses.

Contact us by phone at +1 (786) 706-5905 or by email at admin@sdgaccountant.com.

You can also schedule a free initial consultation with us by clicking on the following button:

Request A Consultation Now

What Happens If I Do Not File or Pay my Payroll Taxes?

Payroll Taxes

When it comes to unpaid taxes, the IRS is a little harsher on corporations than on individuals. Businesses owe more taxes and are more involved in tax administration than individuals. People who owe taxes are treated harshly by the IRS, who consider it a significant infraction and a serious felony. They are unconcerned with an individual’s or a business’s financial situation, whether they have declared bankruptcy or are deeply in debt; all they worry about is that you pay the taxes you owe. Payroll taxes are the most strictly enforced by the IRS of any sort of tax. They are highly concerned about unpaid payroll taxes and have hefty penalties for late payment.

A company that receives payroll taxes from its employees is obligated to pay those taxes on their behalf. If a company fails to pay its taxes, it is considered fraudulent and is dealt with accordingly.

What are Payroll Taxes?

Payroll Taxes

All businesses must submit all accurate information to the IRS, make monthly payments to the federal payroll tax department, and file informational returns. The company is obligated to provide a W-2 Form to all workers and a Form 1099 to any individual contractors so that they may identify how much they were paid and what deductions and bonuses they received. All businesses must also use the IRS-created Electronic Funds Transfer (EFT) system to deposit Medicare and Social Security taxes for their employers and employees. This deposit can be made monthly or semi-weekly and is based on forms from past years, such as Form 941. If your employer has more than $50,000 in tax withholding each year, they must deposit semi-weekly, and those with less than $50,000 in tax withholding must deposit monthly. The IRS will determine the frequency of your deposits, and you will be notified.

Businesses must also pay Federal Unemployment Tax Act (FUTA) tax each quarter if their total salaries paid for the quarter exceeded $1,500. In terms of all the forms and their functions, Form 940 is used to report your FUTA tax. Other forms include Form 941 or Form 944.  On a quarterly basis, Form 941 is used to report employee wages, employer withholdings, and Medicare and Social Security taxes. Form 944 is the same as Form 940, however, it is reserved for employers with annual tax withholding of less than $1,000 per year.

What happens when a business fails to pay or file its Payroll Taxes?

When a company fails to pay its taxes, particularly its payroll taxes, it is not a minor issue. Many firms get into financial difficulties and are forced to postpone paying their taxes. This results in a failure to submit a penalty of 5% every month, with a maximum penalty of 25%. Other steps that the IRS could take include levying or enforcing a levy or lien on the bank accounts of businesses or individuals.

How to Solve this Problem?

This is a significant situation that might be difficult to handle. The first step you could take is, of course, to pay your taxes if you can find the money, but if you can’t, here’s what you need to do. If it is completely difficult for you to pay your taxes, you can request extensions. The IRS is often able to be patient and provide you with a time period and a plan for paying these taxes. If you are unable to do so, do not wait for the IRS to come knocking on your door; instead, get assistance. Seek expert assistance from a Miami Tax Accountant who has dealt with similar issues and assisted individuals and organizations in dealing with them efficiently.

Any form of tax problem necessitates the assistance of a professional. Allow the pros to handle the process of owing payroll services, which can be difficult and intimidating. We can assist you in sorting through your options and determining the best solution and payment plan for you. Our team consists of Tax Preparers in Miami who have been dealing with issues like these for years and have solved them effectively. Be a part of our happy clients and let us take care of all your tax concerns.

All you have to do is reach out to us; you can email us at admin@sdgaccountant.com or call us: +1 (786) 706-5905.