by Kimberly Wenzel, EA

Everyone knows that the IRS sends out letters to taxpayers every year indicating that something was wrong with the tax return that was filed.  The most common is the CP2000 letter. These letters normally infer that there is a large tax balance due because of errors on the filed return.  The IRS also adds interest and penalty amounts to the taxes due that the IRS calculated.    Unfortunately, many taxpayers assume that since the letter is from the IRS, it has to be correct and just pay the balance due.  This is often the wrong thing to do.

I had a client who recently came in with a CP2000.  She felt that since she had prepared her own tax return, she must have made a mistake.  Afterall, how could the IRS be wrong.  She then called the IRS and set up a payment plan and started giving them money every month toward the balance she “owed”.  When she came to see me to have her 2017 tax return prepared, she spoke of the balance she owed to the IRS.  I questioned her a little farther regarding the issues defined by the IRS.  After a brief conversation I asked her to bring the IRS letters and the return she prepared in for my review.   My research revealed that she didn’t owe the IRS that amount of money.  Once I completed a thorough review of the situation, I determined that the IRS owed her a tax refund and the payments she had made.  The IRS ended up issuing a refund and added interest for the use of the client’s money.

This was a unique situation due to the amounts involved.  However, it is a good example of why you should never assume that the IRS or State of Wisconsin is correct.  It is always a good idea to have a tax professional review the situation for you.

When you bring an IRS or Wisconsin Department of Revenue letter to Tax Management & Financial Horizons for review, we will:

  • Review the letter in detail
  • Review the facts and circumstances with you
  • Review the tax return as filed
  • Explain your letter to you
  • Develop a plan to resolve the issue.

Our basic task is to help you resolve the issues with as little impact on you as possible.

For more information about CP2000 letters or other tax resolution issues contact the knowledgeable staff of Tax Management & Financial Horizons, 262 923-8100 or visit our web site