IRS Notice of Deficiency: Form 5564 & Notice 3219A

If you’ve received Notice CP3219 from the IRS, you may be wondering what it means and what you need to do. The IRS sends this notice when there’s new information that changes the amount of tax you owe. This notice is called the IRS Notice of Deficiency. You can accept the changes or challenge them.

What Is IRS Notice CP3219A?

The IRS uses this notice when it receives information that conflicts with the details on your tax return. The IRS notice of deficiency tells you what information was different and lets you know how much tax you owe as a result of the changes.

To take a simple example, imagine you reported an income of $20,000 from a W-2 Form from your employer. However, when your employer sent a W-2 to the IRS, that form said your income was actually $25,000. In this case, the IRS sends out Notice CP3219A.

It often takes months for the IRS to compare all of the documents it receives. As a result, you may not get this notice until months after you file. You may even receive this notice after you received a tax refund.

What Is IRS Form 5564?

Along with Notice CP3219A, you should receive Form 5564. This form is a Notice of Deficiency -Waiver. If you agree with the information on your notice, you can sign this waiver and return it to the IRS.

What If You Disagree with the Information on Notice CP3219A?

If you don’t agree with the information on Notice CP3219A, you have a few options. Your first option, you can send an appeal to the US Tax Court by the date listed on the notice.

Usually, the deadline is 90 days after the notice was issued or 150 days if you live outside the country. Pay close attention to the deadline—the courts won’t consider your petition after that date.

You can download a petition from the US Tax Court’s website or have a petition mailed to you by calling 202-521-0700.

If you have any additional information, you can also send that to the address on your notice, and the IRS will review it. Note, however, that you don’t get an extension on your time to submit an appeal. If you anticipate the need for an appeal, you may want to start working on that while the IRS reviews your additional documents.

You can also call the number on the notice and talk with a rep directly. The IRS says you can make corrections over the phone, but the corrections can’t change the amount of tax you owe. As a result, you may want to handle matters in writing if you need to make any important changes.

What If Someone Submitted Incorrect Information to the IRS About You?

If someone submitted incorrect information to the IRS about you, you should contact that individual. To continue with the above example, let’s say your employer gave you a W-2 that said you had $20,000 in income but sent a W-2 to the IRS that said $25,000.

In this case, you may want to send a copy of your W-2 to the IRS. Then, you should contact your employer and see why the wrong information was sent to the agency. If your employer simply made a typo, it can correct the information with the IRS. If your employer is trying to commit fraud, the IRS can withdraw the assessment for you and direct the inquiry toward the employer.

How Do You Pay an Amount Due on Notice 3219A?

If you like, you can send your payment along with Form 5564 (Notice of Deficiency Waiver). Otherwise, if you send in Form 5564 without a payment, the IRS will issue you a bill.

What If You Can’t Pay the Amount Due on Notice CP3219A?

If you can’t pay the amount due, you can contact the IRS and set up a payment arrangement. If you don’t think you can pay off the balance over time, you do have several options. The option you go with depends on your financial situation. Below are some of the main options if you cannot afford the standard payment plan with the IRS.

• Offer in Compromise: This is where you pay less than the balance due and the IRS eliminates the rest of the taxes owed. Typically, you can only qualify if the IRS believes there is no way you will ever be able to make the whole payment. It helps to have professional tax help when filing an offer in compromise.
• Partial Payment Installment Agreement: If you cannot make the full payment required with a standard installment agreement, the IRS will allow you to pay a smaller payment amount if you can prove to them you don’t have the financial means to pay the full amount. Many times the individuals who qualify for this don’t end up paying off the entire balance owed because the statute of limitations on the tax owed expires before the taxes are paid in full.
• Hardship/CNC Status: If you cannot pay the IRS because of your financial situation, you may have your account placed in Currently Not Collectible status. While in this status the IRS will not try to collect the money owed.

Why Is There a Failure-to-Pay Penalty on Notice CP3219A?

In many cases, Notice CP3219A notes an increase in tax as well as a failure-to-pay penalty. The penalty is based on the fact that the IRS assumes that you should have reported the correct amount on your tax return.

Because you didn’t, you face the additional tax plus a failure-to-pay penalty. In addition, the IRS assesses interest on the due amount from the day it should have been reported and paid.

What Additional Steps Should You Take If You Receive Notice CP3219A?

In addition to submitting Form 5564 or disputing the notice, you should also make a copy of the notice for your records. If you think you may have made the same mistake on tax returns from other years, find those returns and double check. Then, notify the IRS if you find any errors.

In most cases, you face fewer penalties if you reach out to the IRS first rather than waiting. Finally, make any relevant changes to your own copy of your tax return.

Do You Need to Amend Your Return If You Receive Notice CP3219A?

No, you do not need to amend your return. The IRS essentially amends your return with the information noted on Notice CP3219A. You can update your own records accordingly.

However, if you have new information to report that is not reflected on Notice CP3219A, you can use Form 1040X (Amended US Individual Income Tax Return) to make changes to your return.

How Do You Compare Information on Notice CP3219A to Your Tax Return?

You may want to compare the information on this notice to the information on your return. If you don’t have a copy of your return, you can get one from your tax preparer. If you used tax prep software, the software or website should also have a copy of your return saved.

If those options don’t work, you can get a transcript of your return online at the IRS “Get Transcript” page. Registering for this service requests a number of verification steps including providing a cell phone number and a number from a personal loan. If you don’t have that information, you can request a transcript over the phone at 1-800-908-9946 or via mail using Form 4506-T (Request for Transcript of Tax Return).

A transcript is a line-by-line breakdown of your return. It isn’t exactly the same as a return. If you need a copy of your return, send Form 4506 (Request for Copy of Tax Return) to the IRS. There’s a fee for this service.

What If Someone Stole Your Identity?

If you believe that you received Notice CP3219A because someone else is using your name and social security number, you may be a victim of identity theft. In this case, you need to call the number on your notice immediately. You should also file Form 14039 (Identity Theft Affidavit).

Then, you should file a complaint with the Federal Trade Commission at IdentityTheft.gov, set up a fraud alert with the credit reporting bureaus, and pull a credit report to make sure no accounts have been opened in your name.

How Can You Avoid Getting Notice CP3219A?

If you received Notice CP3219A and you want to avoid that in future years, there are a few steps that you may want to take.

• Keep accurate information for your personal records.
• When completing your tax return, use the official forms from your employers or financial institutions rather than the numbers from your own records.
• Check and double check tax forms from your employers or financial institutions to make sure the information is correct.
• Talk with your employers or financial institutions if their information is different from your notes.
• Make sure you report income, expenses, and deductions correctly.
• Get a tax professional to help you.
• If you received Notice CP3219A in the past, take extra caution not to make the same mistake on future returns.

CP3219A Vs. CP3219N

These notices are very similar, but the IRS uses them for slightly different purposes. As explained above, if the IRS assesses tax against you after making changes to your return, the agency will send you CP3219A. However, if you don't file at all and the IRS assesses tax against you, the agency will typically send CP3219N.