Taxpayer’s Guide to IRS Notice CP11
Have you just received IRS Notice CP11 and aren’t sure which steps to take? This notice results from a miscalculation on your tax return, and it’s usually fairly simple to address. It’s also a lot less stressful than many other IRS notices.
To find out what to do when you’ve received IRS Notice CP11, contact us for help today or keep reading. This article explains why you may have received the notice and what to do upon receiving the notice. It also outlines how to agree with or dispute the notice.
IRS Notice CP11 is not an audit, but it is important to respond before the deadline if you disagree. Here’s what you need to know.
What Is IRS Notice CP11?
IRS Notice CP11 is issued when your tax return has miscalculations or errors that exceed five dollars. This is usually due to math errors. As a result of this error, you now owe money to the IRS. This occurs most often when returns are manually submitted on paper.
Note that IRS Notice CP11 is not an audit. The notice outlines and explains the errors made. Often this can be found on page four titled “your tax calculations”. This section explains the miscalculation as well as the change made by the IRS. It can also instruct you on any further action that needs to be taken and how to pay Notice CP11 online.
Why Did You Receive This Notice?
The most common cause for Notice CP11 is a miscalculation due to manual input of information. This occurs when returns are manually submitted by paper and include miscalculations. Then, the math error led to a change in the taxes you owe.
When this happens, the IRS corrects the errors and sends you Notice CP11. IRS Notice CP11 will outline any errors and changes made to the return as well as the balance you now owe. To avoid getting this notice in the future, you may want to consider transferring to tax prep software that corrects any errors made.
Another common reason for receiving this notice is a contradiction between your tax information and information received from a third party, such as an employer. For example, the IRS may send Notice CP11 if they receive a 1099-NEC from a client that you failed to report. In this case, they would make changes to your return and notify you via Notice CP11.
Though Notice CP 11 is not an audit, this can be a step that the IRS takes later. If you disagree with the changes and can’t support your position, the IRS may decide to start an audit of your return.
How to Avoid Getting IRS Notice CP11
As mentioned previously, the most common reason for getting this notice is submitting your returns on paper, which can lead to errors. To avoid miscalculations, you can shift to using electronic software that automatically corrects errors. If you choose to continue with returns on paper, look over your returns and documents very carefully before sending them in. Make sure that you used the correct numbers and do the math multiple times to make sure it’s correct.
If you have received IRS Notice CP11 due to unreported documents from a third party, keeping documents together and organized may prevent this problem. If there is a dispute between you and an employer or another third party, you may need to take further action which will vary according to the circumstance. A tax attorney can help you deal with this issue.
What To Do If You Get Notice CP11
The first step to responding to IRS Notice CP11 is understanding why the notice was received. Read the notice as soon as you receive it. Then, you’ll have sufficient time to decide if you agree or not. You only have 60 days to decide whether or not to dispute the notice.
Read the notice carefully and thoroughly to understand why the IRS believes you owe money. Compare the information in the notice with your tax return and any supporting documents. If you need additional clarification, there will be an IRS phone number listed on the notice.
In the case that you disagree and chose to refute the notice, you have 60 days from the date of notice to contact the IRS via telephone or mail.
Agreeing With the Notice
If you agree with the notice you can pay CP11 online. First, you must make any corrections to the copy of the tax return that you kept so that your own records are the same as the IRS. Then pay the amount owed. The amount must be paid by the date listed on the notice if you want to avoid additional interest and penalties.
You can pay the full amount directly through the IRS’s website from a bank account, debit card, credit card, or third-party payment app. If you pay with a third-party payment processor such as PayPal, you may be subject to fees. If you cannot pay the amount in full before the date listed on the notice you will have to look at the following options.
- Installment Agreement – In the case that the amount cannot be paid in full, you can arrange to make payments with the IRS’s online payment agreement tool. As long as you owe less than $50,000, you qualify to set up payments online. If you owe more than that amount, you will need to apply on paper and submit detailed financial information.
- Partial Payment Installment Agreement – You should consider this option if you can pay monthly payments but are unable to pay the full amount within the collection period, or by the Collection Statute Expiration Date (CSED). The Collection Statute Expiration Date is typically ten years after the assessment date. When the CSED is reached the remaining balance will be written off.
- Currently Not Collectible Status – If your financial situation does not allow for you to pay your balance, you can file for Currently Not Collectible Status. This means that the IRS will not try to collect from you, but you will continue to receive an annual bill and any refunds will be applied to your debt. Having your account placed under this status may lead to further implications because of that it is strongly advised you contact a tax professional before and after applying for Currently Not Collectible Status.
- Innocent Spouse Relief– This is only applicable if you and your spouse filed a joint tax return. If your spouse made an error or miscalculation and there was no reason for you to know about the situation, you may be able to convince the IRS not to hold you responsible for their portion of the debt. Then, you’ll only have to pay the tax debt related to your income.
- Offer In Compromise – This an exception that allows you to settle with the IRS for less than the amount you owe. This is most often settled after all other options have been considered. An Offer in Compromise is granted in regard to a variety of circumstances such as ability to pay, income, expenses, and asset equity. If you think that you may be eligible for an Offer in Compromise, you should consult with an experienced tax professional.
To find more information on all payment options, you can contact the IRS directly or reach out to a tax attorney for help. You can also login into your account with the IRS and view your payments, payment history, and contacts for more information.
Disputing The Notice
If you do not agree with the notice and choose to dispute it, you must do so within 60 days. Contact the IRS in writing or by calling the number on the notice. If you decide to respond via mail you must include; a copy of the notice, additional documentation to support your case, and an explanation as to why you are disputing the notice.
You don’t have to provide supporting documents, but it will help you to bolster your argument. Provide the IRS with documents that back up the information on your tax return as originally filed. If the IRS agrees with the info you provide, they will undo the changes made to your return. If not, the IRS may recommend an audit of your return.
If the 60-day deadline has passed, the IRS will assume that you agree with their corrections and you will forfeit the chance to dispute Notice CP11.
Get Help With Notice CP11
If you’ve received CP11 and don’t agree with the changes, it’s important to contact a tax professional. You should also reach out to a professional if you agree with the changes but can’t afford to pay your tax bill or want help abating penalties.
At The W Tax Group, we are highly skilled in advising our clients, and we aim to provide the best service possible. We always customize our guidance and solutions to our clients’ unique tax problems. Contact us today and put the stress of dealing with the IRS behind you.