Notice CP956: What Is It and How Should You Respond?
Summary:
The CP956 IRS Notice is sent to taxpayers who have been previously approved for tax-exempt status but have failed to file a required annual return. This notice is a reminder to submit the overdue return or provide a valid reason for not filing. Ignoring the notice can result in revocation of tax-exempt status, penalties, or other IRS actions. In this article, we will explain what the CP956 notice entails, why you may receive it, and the steps you can take to resolve it effectively.
Receiving a CP956 IRS Notice can be alarming, especially for organizations that rely on tax-exempt status. This notice informs recipients that they have not filed a required annual tax return, such as Form 990, which is necessary to maintain their tax-exempt status. Understanding the implications of the CP956 notice and taking the proper steps can help avoid penalties, revocation of tax-exempt status, or other adverse actions. This article will guide you through the CP956 notice, its potential impact, and the steps you can take to address it promptly and effectively.
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What CP956 IRS notice is
The CP956 IRS Notice is issued to tax-exempt organizations that have not filed a required annual return, such as Form 990, for a specified tax year. It serves as a reminder to file the return or explain why filing was not required. If the IRS does not receive a response, the organization’s tax-exempt status could be at risk. The CP956 Notice usually applies to non-profit organizations, charities, and other entities with tax-exempt status.
- Filing reminder: The notice serves as an official reminder from the IRS that a required tax return has not been received for the specified year.
- Tax-exempt status at risk: Continued failure to file may lead to the revocation of the organization’s tax-exempt status.
- Potential penalties: The IRS may impose penalties on organizations that do not comply with filing requirements.
Pro Tip
File your annual return as soon as possible, even if it’s past the deadline. This could help avoid further penalties and may prevent the loss of tax-exempt status.
How the CP956 notice affects your organization
Receiving a CP956 Notice indicates that an organization has missed a crucial filing requirement. Failing to respond to the notice or take corrective action can have significant consequences for tax-exempt organizations.
- Risk of losing tax-exempt status: If the IRS does not receive the required return for three consecutive years, the organization’s tax-exempt status may be automatically revoked.
- Increased scrutiny: Non-compliance may draw additional scrutiny from the IRS, which could result in audits or requests for more information.
- Penalties and interest: The IRS may impose penalties for late filing, and interest can accrue on any tax balances owed.
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Steps to take when you receive a CP956 notice
When you receive a CP956 Notice, it’s important to address it promptly to avoid further complications. Here are the steps you should take to resolve the issue:
- Review the notice: Carefully read the CP956 Notice to understand which tax year is in question and confirm that the required return was not filed.
- Gather your records: Check your records to see if you filed the return or have documentation supporting why filing wasn’t necessary.
- File the overdue return: If the return has not been filed, do so immediately. Use the correct form, such as Form 990, 990-EZ, or 990-N, depending on your organization’s financial activity.
- Respond to the IRS: If you believe the notice was sent in error, contact the IRS to resolve the issue. Provide any supporting documents that prove the return was filed on time or that you were not required to file.
- Consult a tax professional: If you’re unsure how to proceed, seek guidance from a tax professional experienced with tax-exempt organizations.
Pro Tip
Maintain thorough records of all filed returns, including confirmations of electronic filing or certified mail receipts. This can help quickly resolve discrepancies with the IRS.
Reasons you may have received the CP956 notice
The IRS sends a CP956 Notice for several reasons, typically related to the organization’s filing history or compliance status.
Annual tax return was not filed
The most common reason for receiving a CP956 Notice is the failure to submit a required annual tax return, such as Form 990. Nonprofits and tax-exempt entities are generally required to file these forms annually to maintain their status.
Issues with the submitted return
In some instances, an organization may have filed the return, but the IRS was unable to process it due to errors, missing information, or incorrect form usage.
Form 990-N requirements
Certain smaller organizations are eligible to file Form 990-N, also known as the e-Postcard. If an organization is eligible but fails to submit this simplified annual return, they may still receive a CP956 Notice.
The return was lost or not received
Although rare, it’s possible that a mailed tax return was lost in transit or misplaced by the IRS. This highlights the importance of using a trackable mailing service for any paper filings.
Responding to the CP956 notice
To prevent further complications, organizations must respond to the CP956 Notice promptly.
File the overdue return immediately
File the missing return as soon as possible to avoid additional penalties or loss of tax-exempt status. Choose the appropriate form based on the organization’s financial activity.
Send documentation to support your case
If the organization believes the notice was sent in error, provide documentation to the IRS that shows the return was filed on time or explains why filing was not required.
Contact the IRS directly
If you need further assistance or have questions, call the phone number listed on the notice or visit a local IRS office for support.
Pro Tip
Consider hiring a tax professional to help navigate the complexities of IRS notices and ensure compliance with all filing requirements.
Consequences of ignoring the CP956 notice
Ignoring the CP956 Notice can have severe consequences for a tax-exempt organization.
- Revocation of tax-exempt status: Failure to file for three consecutive years will result in automatic revocation of tax-exempt status.
- Reinstatement fees: If your tax-exempt status is revoked, reinstating it may require paying fees and submitting additional paperwork.
- Public disclosure: The IRS publishes a list of revoked organizations, which can harm the organization’s reputation.
Best practices to avoid receiving a CP956 notice
Follow these practices to minimize the chances of receiving a CP956 Notice from the IRS.
- File returns on time: Always submit annual returns by the deadline to stay compliant with IRS requirements.
- Use electronic filing: Electronic filing helps ensure timely receipt by the IRS and reduces the risk of processing delays.
- Keep accurate records: Maintain thorough documentation of all tax filings and IRS correspondence.
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Frequently asked questions
What should I do if my organization’s tax-exempt status is revoked?
If your tax-exempt status is revoked, you may apply for reinstatement by submitting Form 1023 or Form 1024, along with the appropriate fee. You may qualify for streamlined reinstatement if the revocation was due to a failure to file for three consecutive years.
Can I still file electronically if I missed the deadline?
Yes, you can file electronically even if you missed the original deadline, as long as the IRS accepts electronic filings for the relevant tax year.
Will my organization face penalties for late filing?
Yes, your organization may face penalties for late filing if it fails to submit the required annual return by the IRS deadline. Penalties can accrue over time and vary depending on the organization’s gross receipts and how late the return is filed. Promptly submitting the overdue return and addressing the CP956 Notice can help minimize or potentially waive these penalties.
How can I avoid losing tax-exempt status?
To avoid losing tax-exempt status, ensure that your organization files its annual returns, such as Form 990, Form 990-EZ, or Form 990-N, on time every year. Additionally, keep track of IRS correspondence and respond promptly to any notices, such as CP956, to resolve issues before they escalate. Organizations should also consider setting up reminders for filing deadlines and opting for electronic filing whenever possible.
Can an organization operate while its tax-exempt status is revoked?
Yes, an organization can continue operating while its tax-exempt status is revoked, but it will not be eligible for the benefits of tax-exempt status during that time. This means that donations may not be tax-deductible for donors, and the organization may be subject to income taxes. To regain tax-exempt status, the organization must apply for reinstatement and meet the IRS requirements for reinstating tax-exempt status.
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 CP956 Notice is issued when the IRS does not receive a required annual return, such as Form 990, from a tax-exempt organization.
- Promptly responding to the notice can help avoid penalties, revocation of tax-exempt status, and other adverse actions.
- If the organization believes the notice was sent in error, contacting the IRS and providing supporting documentation can help resolve the situation.
- Failing to file for three consecutive years will result in automatic revocation of tax-exempt status.
- Using electronic filing and keeping accurate records can help prevent filing-related issues and ensure compliance with IRS requirements.
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