If you’ve recently received an IRS Notice CP220, you may be feeling concerned or confused about what it means for your business taxes. This notice signals that the IRS has made changes to your previously filed business tax return, which could result in additional taxes owed, interest, or penalties. In this article, we’ll break down exactly what IRS Notice CP220 is, the reasons you might receive one, and what steps you should take next if you get this notice.
What is IRS Notice CP220?
As we mentioned earlier, IRS Notice CP220 is sent when the IRS makes adjustments to your business tax return. These adjustments can result from mathematical errors, corrections to reported income or deductions, or changes based on IRS records that differ from what you reported.
The notice will typically include:
- A summary of the IRS’s changes to your return.
- Your new balance due.
- Details on penalties and interest, if applicable.
In some cases, you may receive a CP210 notice instead of a CP220. Although they are similar, there are some distinct differences.
How Do IRS CP210 and CP220 Differ?
Both IRS CP210 and CP220 indicate a change to your business tax return. They are not, however, the same.
- CP210 Notice – Generally sent when you fail to deposit the correct amount of employment taxes or you do not pay them on time. This may result in either a refund or a balance due.
- CP220 Notice – Typically informs you of proposed changes to your business return after an audit reveals underreported income, or deductions/exemptions for which you are ineligible to claim. IRS Notice CP220 is also more likely to increase your tax liability (balance due).
In some cases, the IRS may send a combined notice (CP210/220) if there are adjustments covered under each one. Regardless of which notice you receive, you should take it seriously and address any issues promptly.
Common Reasons For Receiving a CP220 Notice
The IRS issues Notice CP220 for a variety of reasons, including:
- Mathematical or clerical errors in your filed return.
- Mismatched income records between your return and what was reported by employers, clients, or financial institutions.
- Incorrect deductions or credits that were disallowed by the IRS.
- Late or amended filings that caused recalculations.
- Adjustments for payroll or excise taxes owed by the business.
What Should I Do If I Receive CP220?
If you receive a CP220 notice, don’t ignore it. Instead, follow these steps:
- Read the notice carefully. Identify the specific changes the IRS made.
- Compare with your records. Verify whether the adjustments are accurate.
- Gather documentation. If you disagree, collect evidence to support your position and respond within the given timeframe. Make sure you have a copy of your notice and the tax return in question.
- Contact the IRS promptly. Disputes should be addressed quickly to avoid additional penalties and interest. Be sure to contact the phone number listed on your notice when responding.
- Seek professional tax help. A tax expert can review your notice, confirm whether the changes are correct, and negotiate on your behalf.
It is important to take prompt action when receiving a CP220 notice. You typically have a 60-day window to respond. Ignoring it can not only result in penalties and interest but also legal consequences.
Pensamientos Finales
Receiving IRS Notice CP220 (or CP210) can be stressful, especially if you can’t afford to pay your impuestos para empresas in full. The worst thing you can do is ignore the notice. If you’ve received a CP220 notice and are unable to pay your business tax debt, contact Tax Defense Network today. Our experienced team can review your case, explore opciones para alivio de impuestos, and work with the IRS to protect your business from further financial strain