Each year, businesses receive numerous tax notices from government agencies such as the IRS, state, city, and local authorities.

While receiving a notice may initially cause concern, it is essential to approach them with attention and urgency. Responding correctly and on time to tax notices can help you avoid unnecessary expenses, compliance issues, and stressful situations. 

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20 Common Tax Notices You'll Receive 

At Notice Ninja Inc., we offer an effective solution to process tax notices efficiently, minimizing risk for your business. Let's delve into the most common tax-related notices that businesses frequently encounter.

1Notice of Balance Due (CP14):

This notice alerts you to unpaid taxes and provides a 21-day window for payment. Failure to pay within 60 days may result in collection activities by the IRS. If you disagree with the amount, you can dispute the notice and explain your case. If you're unable to pay in full, the IRS can help you arrange a payment plan. 



Notice of Failure to File: 

When you miss the tax return filing deadline, you may receive this notice along with penalties for late filing. The failure to file penalty amounts to 5% of the unpaid taxes per month. You can avoid this penalty by providing a valid reason for filing late or disputing it. Ignoring the notice leads to additional penalties. 



Notice of Failure to Pay: 

If you fail to pay your taxes by the due date, the IRS issues this notice, imposing a penalty of 0.5% on the taxes owed after the due date for each month until payment is made. You can remove the penalty by providing reasonable grounds for late payment. Ignoring the notice results in further penalties.


Mastering Tax Notices


Notice of Information Requested (12C):

The IRS may require additional information to process your tax returns. This notice asks for supplementary documents, forms, or verifications. To resolve the notice, you must provide the requested information to the IRS within 20 days. 



Notice of Earned Income Credit (EITC): 

If you qualify for the Earned Income Credit, the IRS sends this notice. Claiming the credit requires completing the eligibility form and submitting it to the IRS. Upon completion, you can expect a refund within eight weeks. 



Notice of Deficiency/Proposed Adjustment:

This notice arises when there is a discrepancy between your reported tax amount and what the IRS received from employers, banks, or other payers. It's important to note that a CP2000 notice can result in a refund. The notice informs you of the adjustments made and whether additional payment is owed or a larger refund will be received. If you agree with the adjusted amount, you must sign the enclosed form and return it. If you disagree, you can contact the IRS to negotiate or file a petition with the U.S. Tax Court. 



Notice of Audit:

When the IRS plans to audit your account, they issue this notice. They may also request relevant documents for the audit process. When sending documents to the IRS, ensure you obtain a receipt confirmation for record-keeping purposes.



Notice of Determination: 

Following an audit, the IRS sends this notice, providing the results of the audit. You can pay any additional amount discovered during the audit or file an appeal. If you choose to appeal, you must do so within 30 days of receiving the notice. Disputes can usually be handled by a tax representative but may need escalation to the Appeals Office or court. 



Notice of Non-Filer Notice:

If you have a filing requirement but fail to file a tax return, the IRS will send you a "Non-filer" notice. Typically, you receive two notices: a gentle reminder to file the required tax return and a final notice (CP 518) emphasizing the need to file or explain the notice's inaccuracy. Upon receiving this notice, you can file the tax return or dispute the notice. Failure to act may result in the IRS determining the tax for you, potentially delaying any entitled refunds.

Mastering Tax Notices



Notice of SUI Rate Change: 

State unemployment insurance (SUI) covers unemployment compensation for workers who lose their jobs, and it is the employer's responsibility to pay SUI tax. SUI rates can change annually, and you may receive a notice from a state agency regarding the rate change. Recalculate your taxes based on the new SUI rate, and if there were underpayments or overpayments in the previous quarter due to incorrect SUI rates, follow the instructions on the notice to correct the issue. 



Notice of Refund Due (CP24):

If you paid more taxes than necessary, the IRS may issue a notice informing you of the discrepancy and your entitlement to a refund. If you agree with the calculations, no response is required, and the refund will arrive within four to six weeks. If you disagree with the refund amount, contact the IRS to discuss the issue. 



Notice of Statement of Account/Moved Payment(s):

The IRS may decide not to send you a return, and instead, issue a notice (CP88) informing you of the situation. This occurs when there are outstanding taxes from the previous year, and the IRS reallocates the payment to cover that balance. Generally, no response is needed for these notices, but you must monitor the situation to ensure timely tax payments in the future. 



Notice of Error in Filing:

If you made an error when filing your tax return, the IRS can send you a CP3219A notice (Statutory Notice of Deficiency). This notice indicates that the IRS has different information about your taxes compared to what you reported. It may lead to an increase or decrease in taxes. You have the right to challenge the new amount by signing the enclosed form and mailing it to the IRS if you agree, or by sending relevant documents and a statement if you disagree. 



Notice of Levy or Lien:

Levy or lien notifications from the IRS require extra attention, as they usually arise when you have ignored previous notices requesting tax payment. These notices include LT11 (intent to seize your property or right to property), CP504 (final notice for the balance due and intent to levy), CP523 (intent to terminate the installment agreement and seize assets), CP90 (notice of intent to levy for unpaid taxes), and LT1450 (alerts you to a lien and provides resolution instructions). The IRS sends several reminders before issuing these notices. To address them, you need to promptly cover the debt or contact the IRS to set up a payment plan.



Notice of Assessment:

If you haven't been paying federal withholding taxes, typically payroll taxes, the IRS may send you Letter 1153 and Form 2751 (Proposed Assessment of Trust Fund Recovery Penalty). This notice informs you of the IRS's intention to hold you personally responsible for business tax liabilities. Upon receiving this notice, you have 60 days to respond. If you agree to pay the mentioned taxes, you must sign Form 2751 and send it back to the IRS. You also have the right to appeal the proposed assessment, and failing to respond within the allowed timeframe may lead to penalties and liens. 



Notice of Estimated Payments:

If the IRS believes you haven't prepaid an adequate amount of your federal income tax obligation for the year, they may issue a CP30 notice. This notice addresses the failure to make required estimated payments, and as a result, the IRS can assign a penalty for failure to make estimated payments towards your company's tax liability. This penalty can reduce your refund. Study the CP30 notice carefully to determine if the IRS is correct in claiming you failed to make timely or sufficient payments. If you agree, make the payment according to the provided timeline. If you disagree, you can request the penalty's removal by submitting relevant documents or filling out Form 2210. 


Mastering Tax Notices


Notice of SSA Discrepancy: 

You may receive a discrepancy notice from the Social Security Administration (SSA) if their records don't match the IRS records. Common reasons include employee names and Social Security Numbers not aligning with government records. When receiving a "no match" notice, identify employees with discrepancies, inform them about the issue, and instruct them to verify and correct the information in their employment records. Submit the necessary corrections to the SSA.



Notice of Demand Notice: 

Demand notices come in various forms, ranging from simple reminders to intent-to-levy notifications. These notices demand payment to the IRS and require careful consideration to determine if your company is at fault or if an error occurred. Each demand notice includes an explanation and a list of actions you can take to make the required payment or dispute it. Follow the instructions provided, which may involve completing a form, making a payment, or contacting the IRS. 



Notice of Deposit Error: 

If you receive a refund from the IRS that doesn't align with your records, it could be a deposit error. First, verify if the deposit is indeed an error. In some cases, the IRS may have made changes to your return due to a miscalculation, resulting in a C11 notice. If the changes lead to owed taxes, your refund amount can be adjusted. If there is no reason for an incorrect deposit amount, contact the IRS representative to rectify the error. 



Notice of Information Requested:

The IRS may request additional information to process your tax return or verify your identity at any time. Notices CP75 and CP01B serve this purpose. Respond to the IRS by providing the requested information within the specified timeframe mentioned in the notice. 

Manage Your Notices with NOTICENINJA 

Handling tax notices effectively requires organization and timely responses. Missing a notice or providing incomplete information can lead to penalties, misunderstandings, and added stress. Utilizing the notice automation software offered by Notice Ninja Inc. ensures that you never miss a notice. The solution automatically sends notices to the appropriate individuals, ensuring a proper and timely response. Simplify compliance with NOTICE
NINJA today! 

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