IRS Computer Notices

You might be in fear of your mailbox if you have IRS issues. Will I receive a notice from the IRS today? Was an error found in my tax return by an IRS computer audit? Do I owe the IRS more money?

Because the IRS does not have the manpower to do face-to-face audits with every taxpayer, it uses a computer system to check tax returns and send out notices. You could get a notice telling you of an error that was found on your tax return and the ensuing correction either gives you a refund (not likely) or requires you to pay more money. Typically, the balance includes penalties and interest charges. The IRS computers use information from its own files and from other sources.

This situation is just one of over 300 kinds of IRS computer notices generated. The most common notices are:

• Claims you did not declare all of your income: The IRS computer determines if you've reported all your income by scanning its files and comparing your information.
• Claims you made a math or clerical error: Clerical and math responses are verified when the IRS computer analyzes your return.
• Claims you failed to file your return: The IRS computer can see if a return was filed as needed.

If you receive one of the 300 computer-generated IRS notices and you do not agree with it, do not think twice about challenging the IRS and ask that it be fixed. File copies of all IRS correspondence in your records.

If in fact you do need to pay the IRS more taxes and do not pay in 30 days of getting a notice, you will receive 3 more IRS computer notices known as the "500 series". The CP-501, CP-503, and CP-504 notices are bills. You're reminded that you need to pay a tax debt through a CP-501. CP-503 tells you that immediate action is required by the taxpayer. CP-504 is an urgent reminder to respond immediately and if you do not, a levy will be issued.

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