CP279A Notice: What Is It and How Should You Respond?
Summary:
The CP279A notice from the IRS informs taxpayers that their qualified subchapter S subsidiary (QSub) election has been accepted. A QSub election allows an S corporation to designate a subsidiary corporation as a disregarded entity for federal tax purposes, simplifying the group’s tax reporting. The notice is important because it confirms the IRS’s acceptance of this tax election, which impacts how the parent S corporation files its tax returns. The notice may require taxpayers to update their address using Form 8822-B if changes have occurred, and it should be kept for future reference.
Receiving a notice from the IRS can be concerning, but not all IRS notices are negative. If you’ve received a CP279A Notice, it means the IRS has accepted your election for a qualified subchapter S subsidiary (QSub). This notice confirms your subsidiary’s tax status as a disregarded entity under your parent S corporation, which simplifies your tax filings. Understanding what the CP279A Notice entails, the steps to take after receiving it, and the potential impact on your tax obligations will help ensure you remain compliant and can take full advantage of the benefits associated with your QSub election.
Struggling with IRS notices? If you’ve received an IRS letter and aren’t sure how to handle it, you might want to explore professional tax relief options. Optima Tax Relief has helped thousands of people resolve their tax issues and get back on track with the IRS. Learn more about how they can assist you with your situation.
Compare Tax Preparation Services
Compare multiple vetted providers. Discover your best option.
What is the CP279A notice?
The CP279A notice is issued by the IRS to confirm the acceptance of a qualified subchapter S subsidiary (QSub) election. When an S corporation decides to treat a subsidiary as a QSub, the subsidiary is disregarded as a separate tax entity for federal tax purposes. Instead, its assets, liabilities, income, and deductions are reported on the parent S corporation’s tax return. This election can simplify tax compliance and potentially reduce administrative burdens.
The notice serves as official documentation that the IRS has processed and approved the QSub election. It’s essential for the parent corporation to retain this notice in its permanent records, as it may be required for future tax filings or audits.
Pro Tip
Always keep your CP279A notice in a secure place with your other important tax documents. This notice serves as confirmation of your QSub election and may be needed for future tax filings or audits.
Understanding the qualified subchapter S subsidiary election
A QSub election allows an S corporation to treat a subsidiary as a disregarded entity. The election is made by filing Form 8869, Qualified Subchapter S Subsidiary Election, with the IRS. The parent S corporation must own 100% of the subsidiary’s stock for the election to be valid.
By treating the subsidiary as a disregarded entity, the QSub election consolidates the subsidiary’s financial activities into the parent company’s tax filings. This can simplify tax reporting, as the parent corporation will file a single tax return that includes the subsidiary’s income and expenses. However, the parent corporation remains responsible for complying with state and local tax laws, which may have different rules for QSub entities.
Why make a QSub election?
The primary advantage of a QSub election is the consolidation of tax filings, which can save time and reduce administrative costs. Additionally, it allows for the centralized management of tax attributes such as net operating losses and credits. However, there are also potential drawbacks, including loss of liability protection for the subsidiary’s debts and obligations in certain situations. It’s important to weigh these factors before making the election.
What to do after receiving a CP279A notice
Upon receiving a CP279A notice, it’s important to understand what the acceptance of the QSub election means for your business. Here are the steps you should take:
- Keep the notice: Retain the CP279A notice in your permanent records as proof of the IRS’s acceptance of your QSub election. You may need to present this notice in the future for tax filings or audits.
- Notify your parent corporation: If you are handling tax matters on behalf of the subsidiary, ensure the parent S corporation is aware of the notice and any associated changes to the tax filing process.
- Update your address if necessary: If the address listed on the notice is outdated, submit Form 8822-B, Change of Address or Responsible Party – Business, to update your records with the IRS.
How to report your subsidiary’s activity
When a QSub election is in place, the subsidiary’s financial activity must be reported on the parent S corporation’s tax return. Here’s how to ensure accurate reporting:
- File Form 1120S, U.S. Income Tax Return for an S Corporation, to report the consolidated financial activities of the parent corporation and its QSub.
- Attach Form 851, Affiliations Schedule, if the S corporation has multiple subsidiaries, to detail the structure and relationships between the parent company and its subsidiaries.
- Include any additional schedules or forms that may apply based on the nature of the subsidiary’s business activities or the specific tax attributes being claimed.
Pro Tip
Consider consulting a tax professional when making decisions related to QSub elections. They can provide valuable insights and ensure that you comply with both federal and state tax laws.
Common mistakes to avoid
To avoid errors when reporting your QSub’s activity:
- Ensure that the election date on Form 8869 matches the date indicated in the CP279A notice.
- Verify that all forms and schedules are complete and accurate to prevent processing delays.
- Consult with a tax professional if you are unsure about any part of the filing process.
Impact of a QSub election on state and local taxes
While a QSub election streamlines federal tax reporting, it does not necessarily apply to state and local tax laws. Some states do not recognize the QSub status and may require separate tax filings for the subsidiary.
State-specific considerations
- Check if your state allows for QSub elections or has specific filing requirements for disregarded entities.
- Consult with a local tax professional to understand state-specific tax obligations and compliance requirements.
Potential penalties or consequences if you fail to follow up on the CP279A notice
Failing to comply with the requirements following the issuance of a CP279A notice can result in penalties or complications for your tax filings. These potential consequences include:
- Penalties for failing to update your address if the IRS sends correspondence to an outdated location.
- Errors in tax filings if the subsidiary’s information is not correctly reported on the parent corporation’s return.
- Possible audits or additional scrutiny from the IRS if discrepancies arise in your tax reporting.
Pro Tip
If you move your business address, promptly update the IRS using Form 8822-B to prevent any future miscommunication and ensure you receive important notices in a timely manner.
Further support and resources
If you are uncertain about your next steps after receiving a CP279A notice, consider these support options:
- Contact a certified public accountant (CPA) or tax attorney who has experience with S corporations and QSub elections.
- Utilize IRS resources such as the Interactive Tax Assistant for guidance on handling your notice.
- Reach out to the Taxpayer Advocate Service if you encounter difficulties resolving your tax issue.
Looking for the best way to reduce your tax burden? We’ve compiled a list of the Best Tax Relief Companies to help you navigate tax challenges and save money. Click here to discover trusted experts who can assist you with tax resolution, IRS negotiations, and more!
Frequently asked questions
What should I do if my CP279A notice contains errors?
If your CP279A notice contains errors, such as incorrect business information or election details, contact the IRS immediately to request a correction. You can reach the IRS Business and Specialty Tax Line at 1-800-829-4933 for assistance. Be prepared to provide any supporting documentation needed to verify the correct information. It’s important to address errors promptly to avoid potential complications in your tax filings.
Can I revoke a qualified subchapter S subsidiary (QSub) election?
Yes, a QSub election can be revoked if you no longer want your subsidiary to be treated as a disregarded entity for federal tax purposes. To revoke the election, you must submit a written statement to the IRS, indicating the parent S corporation’s name, taxpayer identification number, the subsidiary’s name, and the effective date of the revocation. This revocation will affect the subsidiary’s tax status moving forward, so consider consulting a tax professional before making this decision.
Does a QSub election affect my state tax obligations?
A QSub election impacts federal tax reporting, but state tax treatment may differ. Some states do not recognize QSub status, requiring separate tax filings for the subsidiary. It is important to check the specific tax requirements for the state(s) where your business operates to ensure compliance. Consult with a local tax professional for advice on state-specific obligations.
How long should I keep my CP279A notice?
It is recommended to keep the CP279A notice permanently in your business records, as it serves as official documentation that the IRS accepted your QSub election. Retaining the notice ensures that you have proof of the election during future tax audits, inquiries, or any other tax-related matters.
What if I did not make a QSub election, but received a CP279A notice?
If you received a CP279A notice but did not make a QSub election, it may be due to a clerical error or an unauthorized submission. Contact the IRS immediately to clarify the situation. You should also review your business’s tax records to ensure that no unauthorized filings have been made. The IRS can guide you on how to correct the mistake and prevent future issues.
Need help understanding other IRS letters and notices? Visit our comprehensive guide to IRS Letters and Notices or search for the document you received in the table below.
| CP01 | The IRS verified your claim of identity theft and will monitor your account. |
| CP01H | The IRS received a tax return with a social security number that belongs to a dead person. |
| CP02H | Money is due on an amended return based on a grant received due to Hurricane Katrina, Rita, or Wilma. |
| CP03C | You received the First-Time Homebuyer Credit for a house you purchased. |
| CP04 | You may be eligible for tax deferment because either you or a spouse served in a combat zone, a qualified contingency operation, or a hazardous duty station during the tax year specified on your notice. |
| CP08 | You may be entitled to additional money due to the Additional Child Tax Credit. |
| CP10 | Your tax return changed due to a miscalculation, and the refund you wanted to apply to an estimated tax payment has changed. |
| CP10A | Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment has changed. |
| CP11 | You owe money because the IRS amended your return due to a miscalculation. |
| CP11A | Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment also changed. |
| CP11M | Your tax return changed due to a miscalculation of the Making Work Pay and Government Retiree Credit, and the refund you wanted to apply to an estimated tax payment has changed. |
| CP12 | You are due a bigger refund because the IRS corrected one or more mistakes on your tax return. |
| CP12A | The IRS made changes to correct the Earned Income Credit (EIC) claimed on your tax return. |
| CP12E or CP12F | The IRS corrected a miscalculation on your return. |
| CP12M | The IRS made changes to the computation of the Making Work Pay and/or Government Retiree Credits on your return. |
| CP12R | The IRS made changes to the computation of the Rebate Recovery Credit on your return. |
| CP13 | The IRS made changes to your return due to a miscalculation. There is no refund or amount due. Your balance is zero. |
| CP13A | The IRS made changes to your return due to a miscalculation of the Earned Income Credit. There is no refund or amount due. Your balance is zero. |
| CP13M | The IRS made changes to your return due to a miscalculation of the Making Work Pay credit or the Government Retiree Credit. There is no refund or amount due. Your balance is zero. |
| CP13R | The IRS made changes to your return due to a miscalculation of the Recovery Rebate Credit. There is no refund or amount due. Your balance is zero. |
| CP14 | You owe money on unpaid taxes. |
| CP16 | The IRS made changes to your return due to a miscalculation. The refund you were due was applied to other tax debts. |
| CP21A | You owe money due to the changes you requested that the IRS make on your tax returns. |
| CP21B | You are due a refund due to the changes you requested that the IRS make on your tax returns. The money should arrive within 2 to 3 weeks. |
| CP21C | The IRS made the requested changes to your tax return. You will not receive a refund, and there is no tax due. Your balance is zero. |
| CP21E | As a result of your recent audit, the IRS made changes to your tax return, and you owe money as a result of those changes. |
| CP21I | The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes. |
| CP22A | The IRS made the changes you requested, and you owe money as a result. |
| CP22E | As a result of your recent audit, the IRS changed your tax return, and you now owe money. |
| CP22I | The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes. |
| CP23 | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You owe taxes due to these changes. |
| CP24 | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes. |
| CP24E | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes. |
| CP25 | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You are not due a refund, nor do you owe any money. Your balance is zero. |
| CP31 | You need to update your address because your refund check was returned to the IRS. |
| CP45 | The IRS was unable to apply your overpayment to your estimated tax as you requested. |
| CP49 | The IRS used all or part of your refund to pay a tax debt. |
| CP53 | Your refund check will be sent by mail because the IRS can’t provide your refund through direct deposit. |
| CP57 | The bank declined your payment, so the IRS was unable to draft funds from your bank account. |
| CP71 | A reminder of the amount you owe in tax, penalty, and interest. |
| CP71A | A reminder of the amount you owe in tax, penalty, and interest. |
| CP71C | A reminder of the amount you owe in tax, penalty, and interest. |
| CP71D | A reminder of the amount you owe in tax, penalty, and interest. |
| CP88 | The IRS is holding your refund because you haven't filed one or more tax returns, and it believes you will owe tax. |
| CP90 | The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy in a Collection Due Process hearing. |
| CP91 | The IRS will levy up to 15% of your social security benefits for unpaid taxes. |
| CP120 | The IRS needs documentation of your tax-exempt status. |
| CP120A | Your organization’s tax-exempt status has been revoked because it failed to file a Form 990 series return for three consecutive years. |
| CP130 | You may no longer need to pay the Alternative Minimum Tax (AMT) because your tax return filing requirements changed. |
| CP152 | The IRS received your return. |
| CP153 | The IRS will send your refund by mail because your direct deposit did not go through. |
| CP161 | You have an unpaid balance due to the IRS. |
| CP166 | Your monthly payment to the IRS did not go through due to insufficient funds in your bank account. |
| CP178 | You may no longer owe excise tax because your tax return filing requirements changed. |
| CP231 | You need to update your address because your refund was returned to the IRS. |
| CP259 | You did not file the business tax return identified in the notice. |
| CP259A | You should have filed these forms but did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax, or Form 990-N (e-Postcard). |
| CP259B | The IRS requires you to file these forms but did not – Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation. |
| CP259C | The IRS believes that you are a private foundation, but did not file the required Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation. |
| CP259D | You must file this form, but you did not – Form 990-T, Exempt Organization Business Income Tax Return. |
| CP259E | You should have filed this form, but you did not – Form 990-N (e-Postcard) or Form 990/990-EZ, Return of Organization Exempt From Income Tax. |
| CP259F | The IRS requires you to file this form but did not – Form 5227, Split-Interest Trust Information Return. |
| CP259G | The IRS requires you to file this form, but you didn’t – Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations. |
| CP259H | As a tax-exempt political organization, you must file this form, but you did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax. |
| CP276A | You submitted your tax liability schedule incorrectly. The IRS typically charges a Federal Tax Deposit (FTD) penalty for this but did not this time. |
| CP276B | The IRS did not receive the correct amount of tax deposits. It normally charges a Federal Tax Deposit (FTD) penalty but did not this time. |
| CP297 | The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing. |
| CP297A | The IRS has levied your assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing. |
| CP298 | The IRS notifying you of its intent to levy up to 15% of your social security benefits for unpaid taxes. |
| CP501 | You have a balance due on one of your tax accounts. |
| CP503 | You have an unpaid balance on one of your accounts, and the IRS has not heard from you. |
| CP504 | You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy your state income tax refund to apply it to the amount you owe. |
| CP504B | You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy certain property or rights to property to apply it to the amount you owe. |
| CP521 | A reminder that you have an installment agreement payment due. |
| CP523 | You have defaulted on your payment agreement. Therefore the IRS is terminating the agreement and will levy your assets. |
| CP601 | Usted tiene un saldo pendiente de pago (dinero que le debe al IRS) en una de sus cuentas contributivas. |
| CP603 | No hemos recibido respuesta de parte de usted y todavía tiene un saldo sin pagar en una de sus cuentas contributivas. |
| CP604 | Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará cualquier reembolso de impuestos estatales al que tenga derecho y aplicarlo al pago de su deuda. |
| CP604B | Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará ciertas propiedades o derechos de propiedad y lo aplicará al pago de su deuda. |
| CP621 | Este aviso es para notificarle que usted tiene un plan de pagos a plazos vencido. Por favor, envíe el pago inmediatamente. |
| CP623 | Este aviso es para informarle nuestra intención de cancelar su plan de pagos a plazos y confiscar (embargar) sus bienes. Usted incumplió en su acuerdo. |
| CP711 | Nosotros realizamos cambios a su planilla debido a que entendemos que hubo un cálculo erróneo. Como resultado de estos cambios, usted adeuda dinero por sus contribuciones. |
| CP721 | Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos. |
| CP722 | Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos. |
| CP771 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP772 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP773 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP774 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP959 | Usted no radicó su planilla de contribución de negocios identificada en este aviso. |
| CP2000 | The income or payment information on file doesn’t match your tax return. The discrepancy may result in an increase or decrease in your tax due. |
| CP3219A | The IRS has received information that is different from what you reported on your tax return. This may result in an increase or decrease in your tax. |
| CP3219N | The IRS didn’t receive your tax return, so it calculated your return based on the information received from employers, financial institutions, and others. If you want to challenge the proposed tax, you have 90 days from the date of this notice. If you are outside the country, you have 150 days. |
| Letter 0012C | The IRS needs additional information to process your tax return. |
| Letter 0484C | The IRS wants a completed |
| Letter 0525 | Updates you on proposed changes after an IRS examination. Any changes are explained and details the refund due or taxes owed. |
| Letter 531 | IRS Notice of Deficiency. The information the IRS received about you was different from what you reported on your return. |
| Letter 0668D(LP 68) | The IRS released their levy. |
| Letter 0549C | Your tax bill was paid. |
| Letter 0681C | The IRS accepted your payment proposal. However, this is not a formal Installment Agreement. |
| Letter 0757C | You did not adhere to the terms of your Installment Agreement. |
| Letter LT 11 | The IRS plans to seize your property or rights to property. |
| Letter 1058 | The IRS has not received your payment. It plans to seize your property or rights to property. |
| Letter 1615 (LT 18) | You must respond to the IRS within 10 days of this notice regarding past due tax returns. |
| Letter 1737 (LT 27) | Complete and sign Form 433F, Collection Information Statement. |
| Letter 1961C | Your application for a Direct Debit Installment Agreement was declined. It explains why and what you need to do to qualify. |
| Letter 1962C | Your application for a |
| Letter 2050 (LT 16) | The IRS is trying to collect unpaid taxes from you from returns that have been filed or from returns that have not been filed. |
| Letter 2257C | The IRS is providing the payoff amount that you requested. |
| Letter 226-J | An IRS letter to large employers notifying them that they may be liable for an Employer Shared Responsibility Payment (ESRP). |
| Letter 2271C | A request for an Installment Agreement has been approved. It explains the fees and how to qualify for a Low Income Fee Reduction. The letter may also request missing information. |
| Letter 2272C | An IRS letter explaining why your request to pay the balance due in installments was declined. |
| Letter 2273C | A confirmation letter of your request to pay the balance due in installments. It contained the amount to pay, fees charged, and where to send payment. Instructions on how to apply for the Low Income Fee Reduction included. |
| Letter 2318C | A response to a request to pay taxes due to payroll deductions. It also explains the fees that are charged. |
| Letter 2357C | The IRS is admitting that it did not send you the balance due notices that it should have. |
| Letter 2603C | The IRS accepted your installment agreement. The IRS will file a Notice of Federal Tax Lien on your personal property. |
| Letter 2604C | The IRS has accepted your request for installment payments. This IRS letter provides the monthly payment, the address where to send it, and the fees charged. The letter also provides instructions on how to apply for the Low Income Fee Reduction. |
| Letter 2761C | The IRS is requesting your combat zone service dates to ensure that it provides you with the special provisions and protection of the combat zone deferment. Copies of military orders or other documentation to support your time served may be requested. Civilians working in support of the Armed Forces may be required to provide a Letter of Authorization or a letter from their employer. |
| Letter 2789C | An annual reminder notice, as required by law, of the balance due to the IRS. It explains that penalties and interest continue to accrue until the balance is fully paid. |
| Letter 2840C | Confirms your Installment Agreement request and includes the payment amount and due date. This IRS letter explains the fees charged for paying monthly and explains how to apply for the Low Income Fee Reduction (if you qualify). |
| Letter 3030C | Provides an explanation of the tax, penalty, and interest still due on your account. |
| Letter 3127C | A confirmation of your request to make a change to your Installment Agreement. This IRS letter explains the fees for the change. Changes can be to the payment amount or due date, or it can include additional liabilities. |
| Letter 3174 | A reminder of taxes due after the IRS has sent a Notice of Intent to Levy. |
| Letter 3217C | The IRS has accepted your request to pay the balance in installments. This IRS letter provides your payment amount, the due date, and fees charged. The letter also provides instructions on applying for the Low Income Fee Reduction (if you qualify). |
| Letter 3228 (LT 39) | A request to pay the balance due within 10 days using the envelope provided. |
| Letter 3500 | The IRS has received your documents, and it needs additional time to review them. |
| Letter 3572 | Your Federal Income Tax Return has been selected for examination. The IRS auditor requests that you call to schedule an audit appointment. |
| Letter 4883C | The IRS received your federal income tax return but needs more information to verify your identity in order to process your tax return accurately. |
| Letter 4903 (LT 26) | You must file your tax returns immediately. The IRS has previously contacted you, but it did not receive a response. |
| Letter LP 47 | The IRS is trying to locate the person identified in the letter and is requesting that you provide their new address. |
| Letter LP 59 | The IRS has not received a response to the notice of levy it previously sent. |
| Audit Letter 2205 | The IRS manages audits either by mail or through an in-person interview to review your records. The interview may be at an IRS office (office audit) or the taxpayer’s home, place of business, or accountant’s office (field audit). |
| Letter 915 | You recently underwent an audit, and the IRS informs you that you now owe taxes. |
Key takeaways
- The CP279A notice confirms the IRS’s acceptance of a qualified subchapter S subsidiary (QSub) election.
- A QSub election simplifies tax reporting by treating the subsidiary as a disregarded entity under the parent S corporation.
- It is crucial to retain the notice for future tax filings and ensure the IRS has your correct address on file.
- Failure to comply with related requirements may result in penalties, audits, or other complications.
Share this post:
Table of Contents