IRS CP88 Notice – What Is It And How Should You Respond?

Article Summary:

The IRS sends a CP88 notice when you have unfiled taxes. You may have missed filing one or more tax forms in the previous years, resulting in the IRS sending the Notice and withholding your current taxes. Find out how you can respond to a CP88 and when is the best time to hire a tax professional to help you.

 

What should you do if you receive a CP88 notice?

Screenshot of CP88
An example of a CP88

A CP88 notice will be sent from the IRS if you missed filing one or more tax returns during the tax periods, and the IRS suspects that you may owe money. Your tax refund will be held until the appropriate forms are filed, and mailed to the IRS. In most cases, those files will be your tax returns from previous years and any files from employers during that tax period.

If you are missing documentation, you may want to contact your current or previous employer and discuss how to obtain the information needed. When you receive the W2 from employers, keep track of them and include the information included in your tax return. This will help you avoid receiving a CP88 and other notices from the IRS.

Here is a comprehensive list of notices and letters the IRS uses to communicate with taxpayers.

I forgot to file my taxes; what do I do?

You still have time to respond to the CP88 Notice and file your taxes. You may have to pay a penalty, but you can often request a waiver if you have a good reason (e.g., medical emergency or natural disaster) or it is the first time it happens.

What to do if you have already filed?

If you have already filed within the last eight weeks of receiving the Notice, you probably don’t need to do anything. The IRS will update your files when they receive the paperwork. However, it is a good idea to gather proof that you filed, such as the certified return receipt the IRS provided. If you do not have any proof of filing, you can refile with the IRS, and make sure to keep track of the receipt you will receive from it. Consider keeping track of all your files, whether with a tax professional or in a personal lockbox at home.

Once you have filed, you may want to ensure that you have money saved to cover any unpaid taxes. If you do not have the money to cover the return, you may want to contact the IRS to request an installment plan or offer in compromise by calling the number on the top of the page you receive in the mail.

What should I do if I didn’t file my tax return or it’s been more than eight weeks since I filed it?

If it is has been more than eight weeks since you filed your taxes, complete the response form in your Notice. Check the name, Social Security number or employer identification number, and tax year on your Notice. Check the information matches the name, number, and year on the return. Send the IRS the Response form, and include a signed and dated copy of the return.

The IRS will typically release your refund when they have received all past due returns, or satisfactory explanations showing why you did not have to file for those years.

What if you don’t think you need to file a tax return?

If you receive a CP88 Notice and you had a reason for not filing the taxes, call the IRS on the phone number provided at the top of the Notice or consult with a tax professional.

There are very few reasons you should not file a tax return if you earned income. One reason is if your income is too small to be within a tax threshold (in 2021 less than $12,550). You may also qualify for additional time to file if you were affected by a natural disaster such as a fire, hurricane, or other disturbances. In any case, you will want to call the number provided by the IRS on the CP88, and a representative from the IRS will speak with you and figure out how to handle the situation from there.

If you know you will owe a large tax debt or have a complex tax situation, you may want to contact a tax relief professional before contacting the IRS. Consider tax relief companies that have tax attorneys and enrolled agents. Here is SuperMoney’s list of the best tax relief companies.

You may want to file a return even if you don’t have to

Even if your income is below the minimum income to file taxes, you may still want to file a return. Here are two scenarios where filing would be beneficial.

  • Refund of withheld income taxes. If you received pay during the year and had income tax withheld, it may be in your best interest to file a return to obtain a refund of the amount withheld.
  • Earned income tax credit – This is a refundable credit, which means you can still get a refund even if you do not owe taxes. You don’t need to have children to qualify, and depending on your income, you may be eligible for hundreds or even thousands of dollars.

What happens if you don’t respond to a CP88 notice?

If the IRS does not receive your return or a valid reason for not filing, they will calculate your taxes for you based on information they received from third parties (e.g., employers and clients). Unfortunately, this could mean you don’t receive certain exemptions, deductions, or credits that you would otherwise receive if you filed your own return.

The IRS may use your tax refund (if you have one) to cover your debt. However, if you do not respond to the Notice and you owe taxes, you may eventually (after several notices) have your wages garnished, or you may get a lien attached to a property you own. You could also receive an audit letter, in which the IRS will send you a bill for the taxes if you owe them, including penalties and interest incurred from the date of filing. If you can’t afford to pay your tax bill, you will want to call the IRS to request a payment plan. In some cases, it can be beneficial to hire a tax relief company to negotiate with the IRS on your behalf.

Key takeaways

  • Read the Notice carefully. Find out what tax year is missing, when it is due, and what items you need to gather to resolve the issue.
  • Check the deadline for filing the CP88 to avoid penalties and interest payments.
  • Contact the IRS if you have a good reason for not filing.
  • If you already filed for the period that the CP88 says you did not file for, send the certified return receipt you received when filing. If you cannot find the proof, you can simply refile.
  • In some cases, in can help to hire a tax relief company with tax attorneys or enrolled agents on staff.
Article Sources
  1. CP88 Notice Instructions – IRS
  2. Understanding your CP88 Notice – IRS
  3. List of IRS Notices and Letters – SuperMoney