RP Financial Services clients, brace yourselves! The IRS has recently announced the dispatch of CP-59 notices, targeting individuals with incomes ranging from $400,000 to over $1 million between tax years 2017 and 2021. In this blog post, we'll delve into the specifics of the CP 59 notice, its implications, and the proactive steps you can take to ensure compliance with the IRS.
Understanding the CP 59 Notice:
The CP 59 notice is a correspondence sent by the IRS when there's no record of a previously filed personal tax return. Recipients fall into the highest income categories, and the notice serves as a prompt for immediate action. It outlines the following steps:
File a signed personal tax return promptly or provide an explanation if filing is not required.
Complete Form 15103, Form 1040 Return Delinquency, included with the notice, detailing reasons for late filing or why filing isn't necessary.
Mail the notice stub with the tax return and completed Form 15103, or fax the information to the provided number, ensuring compliance with security protocols.
Newly Revised CP 59 Notice:
The IRS, in alignment with the Inflation Reduction Act funding, has updated the CP 59 notice as part of its Simple Notice Initiative. Key improvements include:
Enhanced content with clear instructions on filing, obtaining transcripts, and payment options.
QR codes directing recipients to relevant filing information and options for resolving outstanding balances.
Reduction in the number of pages for a more streamlined communication process.
Taking Immediate Action:
Recipients of CP-59 notices are urged to take immediate action to avoid escalating consequences. Failure to respond may result in additional follow-up notices, increased penalties, and more severe enforcement measures. Beyond enforcement, here are additional reasons to file past due tax returns promptly:
Avoid interest and penalties by filing and paying promptly.
Claim any potential refunds, as they may be forfeited if not claimed within three years of the return due date.
Protect Social Security benefits by ensuring that self-employment income is reported, contributing to retirement or disability benefits.
Substitute Tax Return and Other Consequences:
Repeated non-compliance may lead the IRS to create a substitute tax return, which may not account for individual deductions and exemptions. This can result in a proposed tax assessment and potential collection or audit actions. Filing a personal tax return remains in the taxpayer's best interest to leverage entitled exemptions, credits, and deductions.
Conclusion:
As CP-59 notices make their way to RP Financial Services clients, timely and informed action is crucial. Stay ahead of potential issues by adhering to the guidance provided in the notice, and reach out to tax professionals for assistance if needed. Remember, proactive compliance not only averts penalties but also ensures you make the most of your entitled tax benefits.