IRS CP210/220 Notice
The IRS sends out CP210/CP220 notices when it makes changes to your tax return. The IRS webpage about these notices doesn't explain the differences between these notices. It also doesn't specify if the notices are for personal or business taxes.
However, many tax attorneys' websites and the comments on this video from a former IRS agent indicate that most taxpayers receive this notice about business tax returns, such as Form 5500 or Form 941. The notice will state which return (1040, 1120, 1120-S, 1065, 940, 941, 944, etc) the changes applied to.
If you've received this notice or any other IRS letter, you can use TaxCure to find a tax pro to help you. Otherwise, keep reading for an overview of what this notice means and what to do if you receive it.
What Is Notice CP210/CP220?
CP210 and CP220 are two notices the IRS sends out when it makes changes to your tax return. These notices outline the changes made, and they tell you what to do if you agree or disagree. Make sure you respond by the deadline or the changes will become permanent.
What to Do If You Receive CP210/CP220
First, look over the notice carefully. Make sure you understand what the IRS changed on your tax return. If you're not sure, consult with your tax preparer. They should be able to tell you what was changed. Then, take the following steps depending on if you agree or disagree with the changes.
If you agree with the changes
If you agree with the changes on the CP210/CP220, you need to make arrangements to pay the tax bill. If you incurred any penalties due to the changes, you may want to apply for penalty abatement. If you cannot afford to pay the bill in full, you can apply for a payment plan.
Note that the rules for business payment plans are much different than the rules for individual payment plans. Typically, if you're still operating, the IRS will only approve payments if you can pay off the balance in two years or less.
If you disagree with the changes
If you disagree with the changes, you can write a letter to the IRS. Explain why you disagree with the changes. Then, attach documents that support the position you took when you filed your return. Mail the letter to the address noted on the CP210 or 220 notice.
If you disagree with some of the changes
If you disagree with some of the changes but agree with others, you can write a letter or amend your tax return. Some tax pros argue that an amended return is clearer and easier for the IRS to understand than a letter. Others prefer letters because they let you explain your position more thoroughly than a tax return.
The amended return should reflect what you believe to be correct. Before amending your return, however, keep in mind that this increases the statute of limitations for audits and collections. Talk with a tax professional to figure out the best approach for your situation.
When to Contact a Tax Pro
IRS notices are notoriously confusing. If you aren't sure what the notice means, you aren't the only one. Here are some signs that you should reach out for professional help:
- You don't understand why you received the CP210/220 notice.
- You don't understand the changes the IRS made to your return.
- Your tax preparer says that they cannot help you.
- You understand the changes but you disagree with them.
- You are facing a big tax bill due to the changes and you aren't sure how to pay it.
- You incurred a lot of penalties due to the changes.
- The tax bill and penalties are hurting your business financially.
Anytime you are stressed out or confused dealing with the IRS, you should reach out for help. Tax pros charge money to resolve these cases, but generally, they save you time, reduce your stress levels, and help you get the best result possible. A knowledgeable tax pro can also help you save money on your tax bill in a lot of cases.
FAQs About Notices CP220 and CP210
Here are answers to some commonly asked questions about these two notices.
Why does the notice say that I made the changes?
Often, the most confusing part of these notices is that they claim you initiated the change. Typically, this happens because the information on your tax return contradicts the information you submitted on another form. If you aren't sure, call the IRS at the number listed on the notice or reach out to a tax pro for clarification.
What happens if I don't pay the bill?
If you don't pay the tax bill created by the changes, the IRS can start the collection process. The agency may file federal tax liens, garnish your wages, seize payments from other third parties, or take your property. The IRS will also add penalties and interest to your account.
What if the IRS owes me a tax refund?
Sometimes, the changes noted on CP220 or CP210 lead to a tax refund. If this happens, the IRS will mail you the refund. Processing times vary, but if the agency takes more than six months to send out a refund, you can request it in court.
If the changes reduced your tax refund, the IRS will send you the remaining balance. Anytime the agency makes changes to your return that affect your refund, it delays refund processing.
What if I found another mistake on my tax return?
If you find another mistake, you should file an amended return. The amended return should reflect the changes that the IRS made (if you agree with them). It should also correct any other mistakes that you have found.
What if I didn't file a tax return for the year on the notice?
If you didn't file a tax return and you receive CP220 or CP210, someone may have attempted identity theft on your account. Scammers sometimes file fake returns to get refunds. Contact the IRS and let them know about the situation.
Get Help With IRS Notices
Have you received a notice from the IRS? Worried about changes to your tax return? Owe a bill that you can't afford to pay? Then, you should reach out for help. Use TaxCure to find a local tax professional today.