Understanding Your Letter 2030

No. We're asking you to verify the income, tax, deductions and payments reported on your tax return because they're different from the information we received from other sources. This letter is only a proposal that gives you an opportunity to disagree, partially agree, or agree with the proposed changes. We haven't charged any additional tax at this time.

Tax years generally end on Dec. 31, but we don't receive information from banks, businesses, and other payers until much later. Once we receive all the tax returns and payer information, we compare the information you reported with the information third party payers provided to us. It can take 8 months or more to complete this review.

If you have a simple response, such as directing us to a specific line on your original return where you reported the income, you can call the toll-free number on the letter and provide the information. We may require a written response if the issue is more involved, especially if you disagree with some of the proposed changes. You may want to mail copies of payer information documents such as Forms 1099 or Schedules K-1. Include any other letters or documents that support your position. You should submit a written statement to explain any unusual tax situations.

If you don’t respond by the date shown on the letter, we'll continue processing the case using the proposed changes. If you need more time to research your records, you can call us at the number on your letter to request a 30-day extension. We may also provide additional time to respond if you have unusual circumstances. Additional interest and any applicable penalties will accrue on the account during the period of the extension if the tax increase is correct.

The law requires us to charge interest on any tax that isn't paid by the return due date (Internal Revenue Code Section 6601).

The law doesn't permit us to reduce or remove interest for reasonable cause. However, in limited circumstances, we may waive penalties. If you believe you qualify for penalty removal, you should include related information in your response

• Keep accurate payment information from banks and other payers to verify you received all payment information for filing your return. Review the documents to be sure they show your most current address.
• Report specific income types on the correct lines on the Forms 1120 PDF or 1041 PDF. For more information, see the reporting instructions for the form you're required to file.
• If you report income on a line not traditionally reserved for that type of income, provide a statement explaining where you reported the income.
• Always attach a statement identifying the source of the amount reported on Form 1120, line 10, or Form 1041, line 8 (Other Income).
• Attach a statement explaining your percentage of gross proceeds that you would be liable to claim on your tax return.
• Generally, if you receive a Form 1099 for amounts that actually belong to another person, you are a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received) for each of the other owners showing the amounts applicable to each.