CP518 Notice: What Is It and How Should You Respond?
Summary:
The CP518 Notice from the IRS serves as a final reminder that your prior tax return has not been received. Ignoring this notice can lead to serious consequences, including penalties, interest, and even IRS enforcement actions. By responding promptly, you can prevent escalated penalties and ensure compliance with IRS requirements. This article provides a thorough breakdown of the CP518 Notice, guidance on responding effectively, and helpful resources for additional support.
Receiving an IRS CP518 Notice can be unsettling. This notice is a final reminder that your prior tax return remains unfiled, prompting swift action to avoid escalating issues. Failure to respond to the CP518 can lead to interest, penalties, and other enforcement actions by the IRS. However, by understanding what the notice entails and responding promptly, you can effectively address the matter. This guide covers the purpose of the CP518, steps to respond, potential penalties, and resources available to support you in navigating IRS requirements.
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What is IRS notice CP518?
The IRS issues the CP518 Notice to remind taxpayers, both individuals and businesses, that a required tax return is missing. This notice often follows other reminders, such as CP59 or CP516, which indicate the IRS’s previous efforts to request the missing return. The CP518 acts as a final warning, alerting taxpayers that failure to respond may lead to enforcement actions, which can include the IRS calculating taxes on their behalf. This estimate, known as a Substitute for Return (SFR), often doesn’t consider potential deductions, credits, or adjustments, which may result in higher tax liabilities.
Reasons for receiving the CP518 notice
The IRS sends the CP518 Notice for several reasons:
- A prior-year tax return is missing: The IRS has no record of receiving a required return for a specific tax year.
- Prior reminders were ignored: The CP518 is typically issued after previous IRS notices have not been acted upon.
- Discrepancies in reported information: The IRS may have received third-party information, such as W-2 or 1099 forms, suggesting that a return should have been filed.
Pro Tip
Reach out to a tax professional if you’re unsure how to respond to the CP518 Notice. Professional guidance can help you avoid costly errors and ensure you provide the IRS with accurate information.
Steps to take if you receive a CP518 notice
Receiving a CP518 Notice requires swift action to avoid further issues. Here are the steps you should take to respond:
- Review the notice thoroughly: Ensure you understand the details of the notice, including the tax year in question, and confirm that the IRS has no record of your return.
- File the missing tax return: Prepare and submit the required return, including all necessary schedules and forms. Use the enclosed envelope for mailing or fax your return to 855-800-5944. Be cautious about digital data privacy when using a fax service, particularly if using online options.
- Complete the response form: The CP518 Notice includes a response form where you can provide additional information, such as:
- Reasons for filing late.
- An explanation if you’re exempt from filing.
- Confirmation that you filed previously, along with the filing date and any discrepancies in name or EIN.
- Verify previous filings: If you’ve already filed the missing return, indicate this on the response form and include relevant details such as the filing date and whether you used the same name and EIN shown on the notice.
- Seek professional assistance: Consulting a certified tax professional can help ensure you accurately respond to the notice and avoid common errors, which can prevent further IRS action.
Pro Tip
When faxing or mailing documents to the IRS, always keep a copy for your records. This provides proof of your response in case the IRS requests further clarification.
Potential consequences if you don’t respond to a CP518 notice
Ignoring a CP518 Notice can have serious repercussions. Here are some potential consequences:
- Substitute for Return (SFR): If you don’t file, the IRS may file an SFR on your behalf. This return will not include deductions, credits, or exemptions you may be eligible for, potentially increasing your tax liability.
- Penalties and interest: Late filing penalties and interest charges continue to accrue on any unpaid taxes, making your debt more costly over time.
- Collection actions: If the tax remains unpaid, the IRS may pursue collection actions, which could include wage garnishments, levies, or liens on your property.
Responding promptly is critical to avoid these consequences and to retain control over your tax filings and potential liabilities.
How to respond to the CP518 notice
Steps for filing a late return
If you’ve determined that a prior-year tax return is indeed missing, it’s essential to file as soon as possible. Here’s how to proceed:
- Prepare the tax return for the specified year: Gather any relevant tax forms, such as W-2s or 1099s, and consult a tax professional if necessary to ensure accurate filing.
- Include all required schedules and attachments: Ensure your return is complete, including all necessary schedules, to avoid additional IRS queries or processing delays.
- Submit via mail or fax: Use the envelope provided with the CP518 Notice, or fax your return to 855-800-5944. Protect your data by following best practices for privacy and security.
Explaining a late filing or exemption
The CP518 Notice includes a response form that lets you provide reasons for filing late or indicate an exemption. You can use this form to:
- Explain your reason for filing late: If you have a valid reason, such as illness or a financial hardship, providing this information may help reduce penalties.
- Clarify if you’re exempt from filing: If you’re not required to file, use this form to explain your exemption status.
- Confirm if you previously filed: If you already submitted the return, indicate the filing date and any variations in your name or EIN on the response form.
Clear communication with the IRS can help expedite the resolution of your account and minimize the risk of penalties or further inquiries.
How the CP518 notice affects your tax records
A CP518 Notice means the IRS has flagged your account for non-compliance due to an unfiled return. This could impact your tax records and any refunds owed for the year. Here’s what to keep in mind:
- Delayed refunds: If you’re owed a refund for the year in question, it may be delayed until you file the required return and resolve the matter with the IRS.
- Higher tax assessments: If the IRS files an SFR, your tax liability may increase, as deductions and credits will not be included.
- Potential collection actions: Continued non-compliance may prompt the IRS to pursue collection actions, such as levies or liens.
Pro Tip
Review your IRS records online through the IRS’s “Get Transcript” tool to confirm your filing history. This can help you identify any missing returns and streamline your response to the CP518 Notice.
Support and resources for responding to the CP518 notice
If you’re uncertain about how to proceed, consider the following resources:
- Consult a tax professional: A CPA or tax attorney can offer guidance on filing late returns and managing any penalties.
- Visit the IRS website: The IRS provides various resources, including instructions for responding to the CP518 Notice and forms for filing past-due returns.
- Contact your local IRS office: If you need in-person assistance, the IRS has offices nationwide that can help you address your tax situation.
- Reach out to the IRS Taxpayer Advocate Service: If you’re experiencing financial hardship or have unique circumstances, the Taxpayer Advocate Service may be able to assist.
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Frequently asked questions
What should I do if I believe I already filed the missing return?
If you think you’ve already filed the tax return that the CP518 Notice references, complete the response form included with your notice. Indicate the date you filed and provide details of any name or EIN discrepancies that may have occurred. This helps the IRS locate your filing. If it has been more than eight weeks since you filed, contact the IRS directly to confirm your return’s status.
Can I request an extension to respond to the CP518 Notice?
The IRS generally expects a prompt response to the CP518 Notice. However, if you need more time to gather documents or require assistance from a tax professional, it’s best to contact the IRS as soon as possible. Explain your situation and ask if any accommodations can be made to avoid potential penalties for delayed filing.
What are my options if I can’t afford to pay the taxes owed?
If you cannot pay the full tax amount due, the IRS offers several options to help you manage your payments. You may qualify for an installment agreement or a short-term payment plan. Additionally, some taxpayers may be eligible for an Offer in Compromise, which allows you to settle your tax debt for less than the full amount owed. Explore these options on the IRS website or consult a tax professional for guidance.
Can the IRS levy my bank account if I don’t respond to the CP518 Notice?
If you do not respond to the CP518 Notice, the IRS may take enforcement actions, which can include levies or garnishments. Ignoring this notice may result in the IRS filing a Substitute for Return (SFR) on your behalf, potentially increasing your tax liability. If taxes are owed and remain unpaid, the IRS may proceed with collection actions. It’s crucial to respond promptly to avoid these consequences.
What should I do if I’m facing financial hardship and can’t comply with the CP518 Notice?
If you’re experiencing financial hardship, consider contacting the IRS Taxpayer Advocate Service (TAS). The TAS provides assistance to taxpayers who are experiencing significant difficulties with their tax situation. You may also want to consult a tax professional who can help you explore relief options like an Offer in Compromise or request a temporary delay in IRS collection activities due to hardship.
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
- CP518 Notice is a final reminder for taxpayers to file missing tax returns.
- Respond promptly to avoid additional penalties, interest, and potential IRS enforcement actions.
- Filing the overdue return, completing the response form, and consulting a tax professional are important steps.
- Failure to respond may result in the IRS filing a Substitute for Return, leading to higher tax liability.
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