Letter 5631: What It Is and How to Respond

Last updated 03/11/2025 by

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Summary:

IRS Letter 5631 is a notification sent by the IRS to alert taxpayers about non-compliance with federal unemployment tax (FUTA) payments. This letter warns that an individual or business has failed to remit the correct FUTA amounts on time and outlines the necessary steps for resolution. Ignoring this letter can result in additional penalties, interest, and potential legal action. In this article, we will explain the significance of IRS Letter 5631, the steps to resolve it, and offer practical guidance on handling future tax obligations to prevent similar issues.

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Receiving IRS Letter 5631 can be concerning, especially when it comes with the potential for penalties and legal consequences related to federal unemployment tax obligations. Understanding the letter’s purpose, your immediate actions, and ways to prevent future occurrences is essential for protecting your financial health. This article will provide a comprehensive guide to IRS Letter 5631, covering everything from what it means, why you might receive it, how to respond, and strategies to maintain compliance.

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What is IRS Letter 5631?

IRS Letter 5631 is an official notice issued by the Internal Revenue Service when an employer fails to correctly remit federal unemployment taxes (FUTA). This tax funds the federal unemployment system, which provides financial support to individuals who lose their jobs. Failure to pay FUTA on time can result in IRS intervention, with Letter 5631 serving as an initial warning. The letter typically details the amount owed, due dates, and potential penalties if the issue remains unresolved.

Why you might receive IRS Letter 5631

There are several common reasons why a business might receive IRS Letter 5631:

Failure to submit FUTA payments: If an employer neglects to pay the federal unemployment tax, the IRS will issue a warning to enforce compliance.
Underpayment of FUTA tax: Paying less than the required amount can trigger an IRS notice to collect the remaining balance.
Missed deadlines: FUTA payments have strict due dates, and failing to meet these can result in Letter 5631.
Errors in tax filings: Mistakes in reported payroll or other tax documents can lead to incorrect FUTA calculations, prompting an IRS notice.

Receiving this letter indicates that the IRS expects a prompt response to resolve the unpaid or underpaid FUTA balance.

Pro tip

Set reminders for all quarterly tax deadlines to avoid missing any FUTA payments. Small administrative adjustments can help keep your business in compliance and avoid penalties.

How IRS Letter 5631 affects you

This letter is a serious notice that requires immediate attention. Failing to respond or resolve the issues highlighted in Letter 5631 can result in severe consequences. Here are the potential impacts:

Penalties and interest

When a business fails to pay its FUTA taxes on time, the IRS can impose penalties, which may be compounded by additional interest on unpaid amounts. These penalties can accumulate over time, increasing the financial burden.

Risk of enforced collection actions

Ignoring Letter 5631 could lead to enforced collection actions, such as liens or levies on business assets. These actions are legally binding and can disrupt business operations if not addressed promptly.

Impact on business compliance status

Receiving repeated IRS notices may damage a business’s compliance reputation. This can affect future dealings with the IRS and may complicate efforts to resolve other tax issues.

Pro tip

Maintain organized payroll records to avoid future issues with FUTA calculations and tax reporting. Consistent and accurate records can help you manage tax responsibilities more effectively.

Steps to take when you receive IRS Letter 5631

Responding promptly and accurately is key to resolving any issues related to IRS Letter 5631. Follow these steps to ensure you’re handling the matter effectively:

Read the letter carefully: Understand the details, including the amount due, deadline, and any specific actions requested by the IRS.
Check for errors: Verify that the IRS information matches your records. Sometimes, discrepancies can occur due to incorrect payroll data or reporting mistakes.
Calculate the required payment: Review your payroll history to confirm the amount owed and ensure that you’re remitting the correct amount moving forward.
Contact the IRS if needed: If you have questions or need clarification, reach out to the IRS at the contact number provided in the letter.

How to respond to IRS Letter 5631

Taking swift action is essential to resolving the issue and preventing further consequences. Here’s how to approach your response:

Steps to complete your response

1. Prepare your payment: If the amount owed is accurate, remit payment immediately to avoid additional penalties or interest.
2. Correct any discrepancies: If there are mistakes in your tax filings, amend the relevant payroll tax documents and resubmit them to the IRS.
3. Provide additional documentation if required: If the IRS has requested further information, include it with your response to ensure a smooth resolution.
4. Submit your response by the deadline: Meeting the deadline is essential to prevent escalation, including enforcement actions.

Pro tip

Consult a tax professional if you are unsure about handling FUTA obligations. A professional can help you accurately calculate tax liabilities and handle IRS communication.

Additional steps to prevent future IRS Letter 5631 notices

Taking proactive measures can help you avoid future IRS notices related to FUTA taxes. Here are some practical steps:

Schedule regular payroll audits: Reviewing payroll records quarterly can catch errors early and prevent misreporting.
Set up automated payments: Automating tax payments can reduce the risk of missing deadlines.
Stay informed about tax law changes: FUTA tax rates and policies may change, and keeping up-to-date ensures accurate tax remittance.

Consistent compliance with FUTA obligations helps maintain a smooth relationship with the IRS and minimizes the risk of costly penalties.

Consequences of not responding to IRS Letter 5631

Failing to address Letter 5631 can have severe repercussions, including:

Escalation to enforced collection actions, such as liens or levies.
Increased penalties and interest, compounding the original debt.
Damage to your business’s compliance status, affecting future IRS interactions.

Ignoring this letter can lead to serious financial and operational consequences, so it’s vital to act quickly and responsibly.
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Frequently asked questions

What actions should I take if the information in IRS Letter 5631 seems inaccurate?

If you believe the information in IRS Letter 5631 is incorrect, begin by reviewing your payroll and tax records to confirm any discrepancies. Gather documentation that supports your position, such as payment records or payroll summaries. Then, contact the IRS using the phone number listed on the letter to discuss the discrepancy and submit any supporting documents. Consulting with a tax professional can also help ensure that any errors are effectively addressed.

Is there a penalty for responding late to IRS Letter 5631?

Yes, delaying your response to IRS Letter 5631 can lead to additional penalties and interest on unpaid FUTA amounts. The IRS sets deadlines for response, and missing them can result in further action, such as collection measures, and increase your financial burden. It’s best to respond by the indicated date to avoid any potential penalties. Setting up reminders for tax obligations can help prevent future delays.

Can I negotiate or reduce the penalties associated with IRS Letter 5631?

In some cases, the IRS may allow penalty relief or reduction if you can demonstrate reasonable cause, such as financial hardship or an error beyond your control. You can submit a written request explaining your circumstances along with supporting documentation. The IRS will review and determine if a penalty reduction or abatement is appropriate. Consulting a tax advisor may increase the likelihood of a favorable outcome.

How long does it typically take for the IRS to resolve FUTA discrepancies after responding to Letter 5631?

The timeframe for resolution can vary based on factors like the complexity of your case and the IRS’s workload. Generally, it may take a few weeks to several months for the IRS to review your response and reach a decision. You can check the status by contacting the IRS directly or logging into your online IRS account. Keeping copies of all correspondence can help track the progress of your case.

What should I do to prevent receiving future IRS notices like Letter 5631?

To avoid future issues with IRS notices, ensure accurate and timely FUTA payments. Regularly review your payroll records, set reminders for tax deadlines, and consider using automated payment options. Conducting quarterly audits can help you catch and correct any discrepancies early. Staying informed about changes in tax laws and working with a tax professional can further strengthen compliance.

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

IRS Letter 5631 warns employers about missed or incorrect FUTA payments, requiring prompt action to avoid penalties.
Ignoring this letter may lead to interest, additional penalties, and possible enforced collection actions by the IRS.
It’s crucial to verify any FUTA underpayments or errors, pay any amounts due, and respond within the deadlines.
Regular payroll audits and automated payment setups can help businesses maintain compliance with FUTA obligations.
Consulting a tax professional can provide guidance on future tax compliance and assist in handling IRS communications.

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