Understanding IRS Notice CP23

March 28, 2023 by Kate Ferreira
Woman reading a letter on a phone

Well, it finally happened. You received a letter from the IRS. Before you panic and start looking for one-way flights to Aruba, it is best to be aware of all your options. However, to understand your options, it is important to figure out what it is that you received from the IRS in the first place.

If the letter you received from the IRS says CP23 in the top right-hand corner, you are in the right place. It probably looks something like this:

CP23

Now – why did you receive this notice? According to the IRS website, these letters are issued to notify you of a change to your return because they found a difference between the amount of estimated tax payments on your tax return and the amount that they posted to your account. This difference resulted in a balance due – hence, why the letter you received has an amount due listed.

What if you do not pay estimated taxes? Well, the most common cause is that you might have accidentally added an incorrect entry on the estimated tax line of your tax return. We will discuss your options below if this is the case.

In the instance that you do pay estimated taxes and received this letter, there are a few things we recommend you do.

First, read your notice carefully and completely. The IRS will spell out how much money you owe in tax. You will want to compare the payments on the notice and any refund amount from the prior year you applied to the tax year in question (if applicable) to the notice you received. This can be done by accessing your account on the IRS website.

If everything matches up, and you agree with the proposed amount due from the IRS, then you will want to:
 

Pay the amount due by the due date on the notice.

 

  • You can make payments online by clicking here.
  • If you are unable to pay the entire balance in full, there are options to set up payment plans or installment agreements with the IRS. Click here to apply online for a payment plan with the IRS. If you would like to set up a payment plan over the phone, contact the number listed on your notice.

Once you make the necessary payments or arrangements, be sure to correct the copy of your tax return for your records so you can refer to it when you prepare next year’s return. However, do not send a copy to the IRS as this could cause confusion. In this case, the IRS will make the changes to your account automatically.

If you have reviewed your records and the IRS letter and do not agree with the proposed amount due, or you do not pay estimated taxes, did not inadvertently make an incorrect entry on your return, and are lost about why you received this letter, then contacting the IRS is required. You should contact the IRS by phone within 60 days of the date of the notice or by mail.

Keep in mind that if you file a joint return with your spouse and the spouse who made the estimated tax payments is not listed as the “primary taxpayer” (the person who is listed on the first line of the return), it is possible the payments may not have been applied properly. If this is the case, you will need to contact the IRS using the phone number listed on the notice. Before calling, you may want to have a copy of the cancelled check records from the bank handy.

However, if you have an Audit Defense Membership with TaxAudit, this is exactly the type of notice that we would be able to help with! Simply contact our Customer Service Department either by calling 800-922-8348 or by clicking here to create/log in to your account and report your letter online.

While we understand that receiving a letter from the IRS can be a scary experience, at TaxAudit, we aim to make the process as painless as possible. If you are interested in purchasing a current-year membership (or, if you are already a member, and would like to purchase additional years of Audit Defense Membership), simply click here to learn more.

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Kate Ferreira
Communications Associate

 

Kate Ferreira is a Communications Associate with TaxAudit. A California Tax Education Council (CTEC) registered tax professional, Kate has been with the organization since 2015. Kate enjoys the challenge of writing about complex issues – including taxes. Outside of work she enjoys traveling, listening to vinyl, and going on adventures with her dog, Indiana Bones.


 

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