CP36 Notice: What It Means and How to Respond

Q: How does the CP36 notice affect your business?

If not resolved, a CP36 notice can impact your business: 1. Tax processing delays : Unresolved discrepancies delay tax filings, potentially affecting refunds or inviting further scrutiny. 2. Penalties and interest: Ignoring a CP36 notice may lead to penalties and accumulating interest if... Learn More at SuperMoney.com

Q: What potential outcomes can occur after correcting the discrepancies?

Possible outcomes after corrections include: Refund processing: Overpaid taxes result in refunds once corrections are processed. Updated records: The IRS updates records, improving future filings. No further action: Minor discrepancies may be quickly resolved. Prompt and accurate action reduces the... Learn More at SuperMoney.com

Last updated 11/10/2024 by

SuperMoney Team

Edited by

Andrew Latham

Fact checked by

Ante Mazalin

Summary:

The IRS issues the CP36 notice to inform businesses of discrepancies in reported wages and withholding amounts on Forms 941 or 944. Businesses must address these discrepancies quickly to avoid penalties, tax processing delays, or additional audits. This article explains the CP36 notice, common causes of these discrepancies, and steps businesses can take to resolve them. Prompt action can help reduce penalties and support accurate tax reporting in future periods.

Receiving an IRS notice creates stress for any business, especially if it involves wage reporting issues. The IRS sends the CP36 notice when it finds inconsistencies between reported amounts on Forms 941 or 944 and the total wages and withholdings. These discrepancies may stem from clerical errors, mismatched data, or other reporting issues affecting tax filings.

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The CP36 notice alerts businesses to potential errors and outlines steps to correct them. Ignoring it may lead to penalties, delays, and other tax issues. This article explains the CP36 notice, why it’s sent, and how to respond effectively.

What is the CP36 notice?

The IRS sends the CP36 notice to notify businesses of discrepancies in total wages and withholding amounts reported on Forms 941 or 944. These forms report employment taxes, such as Social Security, Medicare, and federal income taxes withheld from employees’ wages.

When the IRS detects a mismatch, it issues the CP36 notice, prompting the business to make corrections. Discrepancies can occur due to:

– Incorrect wage amounts on the forms.
– Inaccurate Social Security or Medicare tax withholdings.
– Data entry errors on Forms 941 or 944.
– Mismatches between IRS and business-reported wages.

The CP36 notice provides instructions on correcting these discrepancies and outlines consequences if left unresolved.

Why did I receive a CP36 notice?

Receiving a CP36 notice can be confusing. Common reasons include:

1. Wage or withholding discrepancies: If the IRS finds differences between the wages or tax withholdings reported on your forms and its records, it issues a CP36 notice.
2. Incorrect tax payments: Discrepancies in tax payments may arise from calculation errors or late payments.
3. Incorrect data on employer’s forms: Mismatches between reported wages and employee tax returns trigger the notice.
4. Filing errors: Entering incorrect numbers or missing details can cause IRS issues.

Carefully reviewing your records helps identify the exact discrepancy and guide corrective actions.

Pro Tip

Review your payroll records regularly to ensure accurate reporting of wages and tax withholdings. This proactive step can help prevent discrepancies and reduce the likelihood of receiving a CP36 notice.

How does the CP36 notice affect your business?

If not resolved, a CP36 notice can impact your business:

1. Tax processing delays: Unresolved discrepancies delay tax filings, potentially affecting refunds or inviting further scrutiny.
2. Penalties and interest: Ignoring a CP36 notice may lead to penalties and accumulating interest if discrepancies remain.
3. Audits: Persistent discrepancies can lead to IRS audits, which can be time-consuming and costly.
4. Impact on employee tax records: Errors involving employee wages or withholdings can affect their tax filings.

Quick responses to a CP36 notice minimize these risks and avoid further complications.

What should you do when you receive a CP36 notice?

When you receive a CP36 notice, act quickly to resolve the issue. Follow these steps:

Read the notice carefully: Review the discrepancies to identify the errors.
Review your records: Check reported wages and withholdings against payroll records.
Contact the IRS: If the notice seems incorrect or you need help, contact the IRS at the number provided.
Correct the errors: Identify discrepancies and correct Forms 941 or 944 as needed.
Submit corrected forms: File amended forms with the IRS according to the notice’s instructions.

Maintain thorough documentation of any changes, as it may be needed for future reference.

Pro Tip

Make use of IRS Form 941-X or 944-X to correct discrepancies quickly and accurately. Submitting an amended return online can expedite the process and reduce delays.

Steps for correcting discrepancies on Form 941 or 944

Follow these steps to correct discrepancies:

1. Review the CP36 notice: Note specific discrepancies and amounts.
2. Check your records: Verify wages, tax withholdings, and other details.
3. Amend the forms: Submit corrected returns using Forms 941-X or 944-X.
4. Submit corrections: File corrected forms as instructed in the CP36 notice.
5. Pay any additional taxes: If corrections increase taxes owed, pay promptly to avoid penalties.

Further support options for addressing the CP36 notice

If you need assistance resolving discrepancies:

Consult a tax professional: Seek help from a certified tax professional or CPA.
Contact the IRS: Use the CP36 notice contact number for guidance.
IRS resources: Access the IRS website for instructions and resources.

Professional help can prevent further complications.

Potential consequences of ignoring the CP36 notice

Ignoring a CP36 notice can lead to serious consequences:

Penalties and interest: Unresolved discrepancies may incur penalties and interest.
Tax return delays: The IRS may delay processing tax returns, impacting refunds.
Increased scrutiny: Repeated issues may prompt IRS audits or legal actions.

Take prompt action to avoid these outcomes.

Pro Tip

If you suspect a mistake or error from the IRS, contact them immediately to resolve the issue before it escalates. Waiting too long can result in penalties or additional scrutiny.

What potential outcomes can occur after correcting the discrepancies?

Possible outcomes after corrections include:

Refund processing: Overpaid taxes result in refunds once corrections are processed.
Updated records: The IRS updates records, improving future filings.
No further action: Minor discrepancies may be quickly resolved.

Prompt and accurate action reduces the impact on your business.

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Frequently asked questions

What should I do if I cannot find the discrepancies mentioned in the CP36 notice?

If you are unable to find the discrepancies mentioned in the CP36 notice, it is crucial to double-check your records and compare them against the figures provided by the IRS. You may want to review employee wages, tax withholdings, and other relevant financial information. If the discrepancy still isn’t clear, consider contacting the IRS directly using the contact information on the CP36 notice for further clarification. They may be able to provide additional insights or guide you through resolving the issue.

Can I respond to the CP36 notice electronically?

Currently, the IRS typically requires paper responses for correcting discrepancies related to Form 941 or 944. However, you can e-file corrected returns (Form 941-X or 944-X) electronically using the IRS e-file system, which speeds up the process. Be sure to carefully follow the instructions outlined in the CP36 notice when submitting your response, including any required supporting documentation. If you’re unsure, you can contact the IRS for further clarification on the correct submission method.

How long does it take to resolve the discrepancies identified in the CP36 notice?

The time it takes to resolve discrepancies can vary based on the complexity of the issue and how quickly you respond. If you submit the necessary corrections promptly, the IRS may process the amended forms within a few weeks. However, if additional investigation or documentation is required, it could take longer. It is important to stay proactive in addressing the discrepancies and keep track of all correspondence with the IRS.

What if the IRS sent the CP36 notice in error?

If you believe that the CP36 notice was sent in error, it’s important to contact the IRS immediately. Sometimes the discrepancies may result from incorrect data entered by the IRS or issues with the way forms were processed. You will need to provide any supporting evidence that confirms your records are accurate. If the IRS verifies that the notice was sent in error, they will update their records and you will not need to take further action.

What happens if I don’t respond to the CP36 notice at all?

Failure to respond to the CP36 notice can lead to significant consequences, such as penalties and interest on any unpaid taxes. Additionally, if the discrepancies remain unresolved, the IRS may initiate a more detailed audit of your business’s tax filings. This can result in even greater financial penalties and a more lengthy and invasive review process. To avoid these potential issues, it’s important to act quickly and resolve any discrepancies identified in the notice.

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.

IRS Letter or Notice Number

Notice Description

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 CP36 notice alerts businesses to discrepancies in wages or withholding amounts on Forms 941 or 944.
Prompt corrections are necessary to avoid penalties and delays.
Use Form 941-X or 944-X to file amended returns and resolve discrepancies.
Ignoring the CP36 notice may lead to penalties, interest, and audits.

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