IRS Notice 2566 | Understanding IRS Notice CP2566- IRS is Filing Substitute Return- Not in your favor

IRS Notice Letter 2566

Letter 2566 has been revised by the IRS and it is now called “Notice CP2566″. Notice CP 2566 is a dangerous letter to receive and means the IRS is preparing a “Substitute For Return”.

The IRS only sends Notice CP 2566 if they believe you owe. If you fail to respond the IRS will issue a Letter 3129, Notice of Deficiency. This means you’ll either have to go to Tax Court, file a return in dispute.

The letter invites you to either sign and agree to the amount, file a return or write a letter. Writing a letter to the IRS will likely not resolve the problem. The IRS has specific forms and procedures, which must be followed. IRS misleads you when they invite you to simply “write a letter”. It will only cause you frustration.

You Filed Your Return

If you did file a return, you are going to want to gather proof of mailing. The certified return receipt is the best proof of filing. The green card provides proof that you filed the return and the date it was received. If you have the certified mailing receipt, then you can argue about the filing date and there is a procedure for this.

But, unless you have the mailing receipt, it is usually better to just re-file your return. However, since you are filing an original return you have the opportunity to comb through your records and find more deductions.

You Did Not File Your Return

This is a wakeup call that the return needs to be filed. If you do not have the information and documents to prepare the return, you can request wage and income/account transcript from the IRS by calling 1-800-829-1040. It is not wise to rush out and file a return before reviewing your IRS information and considering your options. Especially since the IRS may seize your refund to pay for other taxes or student loans, etc.

This is NOT an audit and only become one based on the information provided on the return. The fact that you are filing one or more back returns does increase your chance of being audited.

The IRS can’t enforce collection against you until you either file a return or they do a “Substitute For Return” and assess the tax.

Filing a bunch of back return, without an Action Plan, especially if you will owe is not in your best interest. It is typically best to prepare all the missing return, form a Plan of Action for resolution and then file all the returns to the correct IRS address.

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What is my first step?

If you received a letter or notice, a decision has to be made. Do you feel confident to handle this situation on your own? If it is a simple issue and you already know the answer, call or write them. If the issue is more complicated, you need to hire a Certified Tax Resolution Specialist. The IRS or State will take full advantage of your lack of knowledge and experience.

What is Your Next Step?

The next step is to determine if the notice was sent in error. Do you have an outstanding tax liability? Do you have unfiled or incomplete returns?

Is There a Time Limit?

Yes, each letter or notice from the IRS or State will indicate a date that you MUST to contact them by. If you need more time, call the number on the notice or letter and request an extension. DO NOT ALLOW the time to expire without contacting them or hiring a representative to contact them for you.

What You Don’t Want to Do!

What you don’t want to do is nothing. Your tax problems will only get worse if you ignore them. If you cannot pay, there are a number of potential solutions available to those who are otherwise in compliance. In compliance means having all tax returns filed and any balances paid or on a payment plan. If you have outstanding debts or unfiled returns, you need to get hire a Certified Tax Resolution Specialist.

Get Some Help

If you don’t know how to address the issue(s), have unfiled return/unpaid balances or just done feel confident, let the experts at Legacy Tax & Resolution Services represent you. Work with our team of Certified Tax Resolution Specialists to resolve your issue(s) quickly. Best of all, you don’t have to talk to the IRS or State; we can speak on your behalf.