IRS Notice CP59: What to Expect and How to Respond
Most people working or running a business in the United States are required to file a tax return every year. If you don’t file a return and the IRS thinks you should have, you’ll probably receive Notice CP59.
This is one of the first IRS notices in the non-filer series, and to protect yourself, you should respond promptly. At this point, time is on your side. A CP59 notice doesn’t automatically mean you did something wrong, but if you don’t respond, the situation could escalate.
This page walks you through everything to know about IRS Notice CP59, including reasons you may get it and what to do next. Reach out to the McLaud Law P.C. if you need assistance filing taxes, dealing with tax debt, or solving other tax problems.
Key takeaways
- The IRS sends Notice CP59 when it believes you should have filed a tax return but didn’t do so by the deadline.
- Notice CP59 is not a bill or a criminal charge.
- Subsequent notices may be CP515, CP518, and CP2566.
- View your tax records online through the IRS system to confirm you have or haven’t filed your tax return.
- File as soon as possible so you can claim your refund in time and avoid a substitute for return (SFR) filed for you by the IRS.
Why You Received IRS Notice CP59
When the IRS thinks you should have filed a tax return but didn’t, it will send you IRS Notice CP59. The notice indicates which year’s tax return is missing, outlines steps to take right away, and says how to respond if you believe the information is false.
Here are a few common reasons why the IRS may believe your tax return is missing:
- The IRS received information about your income from third parties, including W-2 or 1099 tax forms.
- You’ve filed returns in previous years, and the agency wants to know why you didn’t file this year.
- A mistake on your tax return, such as an incorrect Social Security Number, prevented it from being processed correctly.
- You filed your return or requested an extension, but a system delay led to the notice being sent anyway.
- You filed your most recent tax return, but one from a prior year is missing.
If you don’t respond to the notice, the IRS will continue to contact you about your unfiled return and unpaid taxes. If you’re not sure what to do next, contact the team of tax professionals at McLaud Law P.C.
Other Unfiled Tax Return Notices
Notice CP59 isn’t the only notice you could get from the IRS about unfiled tax returns, though it’s usually the first. Here are other related notices to watch for, and when they may come:
- CP259: This notice is similar to CP59 and lets you know that you haven’t filed a tax return, but the IRS believes you are required to.
- CP63: If you’re owed a refund, this notice indicates that the IRS is holding it because you have outstanding tax returns.
- CP515 or CP516: Next in the sequence of notices could be CP515 or CP516, which both act as a reminder that you haven’t filed for the applicable tax period but are required to.
- CP518 or CP518B: These notices are final reminders that you need to file, but the IRS still has no record of a return.
- CP2566: The IRS sends this notice when you haven’t responded to prior notices and still have an outstanding return. They have now calculated your taxes owed based on the information they have about you, and the line items include your tax liability, any penalties and interest charged, and the total amount due. If you don’t do anything after this notice, the IRS will file a substitute for return (SFR) on your behalf with their calculations.
The faster you respond to the first notice, the faster you can get your tax return issue resolved. Read the notice carefully to understand your deadline for responding or filing and what to do if the information is incorrect.
What If You Already Filed a Tax Return
If you already filed, the right response depends on when you filed. If you filed:
- In the last 8 weeks: The IRS says you don’t need to do anything, but to be on the safe side, you may want to double-check that you really filed and check that they received it.
- More than 8 weeks ago: If you filed more than 8 weeks ago, then the IRS likely didn’t receive your return, or it’s been lost. Contact the agency or reach out to a tax attorney. You may need to send in a new copy of your tax return.
How to Find Your Tax Records
Sometimes the IRS is wrong, so you may want to confirm that you already filed your tax return before you contact them. Here’s how to find your transcripts:
- Sign in to your Individual Online Account on the IRS website.
- View your tax return transcripts to confirm if you did or didn’t file the applicable return.
- View your payment history and all other tax records.
- If you can’t access your online account, request a mailed transcript to view your records.
- Ask a tax attorney to help you check if you’ve filed.
What to Do If You Haven’t Filed
If you haven’t filed your tax return, it’s important to act quickly to avoid additional notices, penalties, and interest. Take these steps after you receive Notice CP59:
File Your Tax Return
Gather your tax information for the applicable year, and get your tax return filed. Make sure you sign your return and include your payment for taxes owed. The IRS may have provided an envelope with the CP59 notice that you can use to send your return and payment, or you can file and pay electronically if the return is from the last three years.
Send Form 15103 If Applicable
If the IRS sent Form 15103, Form 1040 Return Delinquency, with the CP59 notice, you can use it to respond. The form lets you tell the IRS if you already filed, don’t have a filing requirement, or plan to file soon. It also tells you what to do if you received CP59 on behalf of a deceased person.
What if You Don’t Respond
Here’s what can happen if you don’t respond to the CP59 non-filer notice:
- More notices: As explained above, the IRS will continue to send non-filer notices.
- Substitute for return: The agency may prepare a substitute for return to estimate your tax liability.
- Notice of Deficiency: You get 90 days to respond, or you owe the liability shown on the SFR.
- Penalties and interest: The IRS will backdate penalties and interest to the return’s original due date.
- Collections: The IRS can use tax liens, wage garnishments, and asset levies to collect the unpaid balance.
Why Filing a Return Is Better Than an SFR
If you don’t file on time, can’t you just let the IRS file an SFR for you? It’s almost always better to file an accurate return yourself, since SFRs usually inflate the amount of tax you owe.
For instance, if you’re eligible to take tax credits or deductions, the SFR won’t account for those. If you operate a business as sole proprietor, the IRS might see 1099 income reported in your name and assess tax as if that was entirely personal income to you, without any regard for your business expenses. So, if you go solely off the IRS’s tax assessment, you’ll be paying a lot more than you really owe.
In most cases, you should file your tax return as soon as you receive an IRS notice to avoid an SFR.
Tax Resolution Options If You Owe After Filing
Some taxpayers don’t file on time because they can’t afford their tax bill. If you can’t pay your balance after filing, you have options to resolve your tax debt. These options are best evaluated by an experienced tax resolution professional. With their counsel, you may consider requesting one of the following:
Installment Agreement
Pay whatever you can now, and then set up a payment plan to cover the rest of your balance in monthly installments. This gives you more flexibility when you’re having trouble paying in one lump sum, and you’ll still be in good standing with the IRS if you comply with the agreement.
Offer in Compromise (OIC)
If you can’t afford to pay your balance, even with a payment plan, you can send in an offer in compromise (OIC) to settle your tax debt for less than owed. You’ll be required to show evidence of your financial situation, and if the IRS believes your offer is all they can reasonably expect to collect, they may accept it.
Currently Not Collectible (CNC) Status
Another option could be currently-not-collectible (CNC) status. When you’re dealing with financial hardship, the IRS may agree to put your account in CNC status, which temporarily halts collections. Once your situation gets better, you’ll have to pay, but if the collection period expires while you’re on CNC status, you won’t have to pay.
Penalty Abatement
If you’ve been charged with penalties because of your late tax return, including the failure-to-file, failure-to-pay, or failure-to-deposit penalties, you could qualify for penalty abatement. The first form is first-time abatement, which is granted to taxpayers who don’t have any other penalties and have filed the last three years without issue. The second type is for reasonable cause, which applies to cases like a natural disaster or illness that got in the way of your ability to file or pay on time.
Should You Contact a Tax Attorney for Unfiled Taxes?
A tax attorney isn’t always necessary if you have an unfiled return, but sometimes, their help can be critical. If you simply missed a deadline and can file now, you may want to go ahead and do so on your own.
However, it’s wise to work with a tax attorney if you’re dealing with one of these situations:
- You have a high tax balance that you can’t afford to pay off.
- You have multiple years of unfiled returns.
- You need help reconstructing income or business records.
- An IRS revenue officer is involved in your case.
- You’ve received multiple notices about IRS actions like penalties, tax levies, or tax liens.
- The IRS filed an SFR on your behalf, and you’re not sure what to do next.
A tax attorney will review your case and help you move forward with the best option for your situation, whether that’s applying for relief, filing your return accurately, or negotiating with the IRS.
CP59 FAQs
Have more questions? Check out the following or reach out to us directly for answers customized to your situation.
Is CP59 a bill?
No, CP59 is not a tax bill. It’s a non-filer notice. However, if you don’t respond and the IRS believes you should have filed, they may issue a substitute for return to estimate your tax liability which will eventually lead to a tax bill.
How does the IRS know I didn’t file?
The IRS generally sends non-filer notices when it receives income documents, such as W-2s or 1099s, indicating that the taxpayer’s income was over the filing threshold for their situation.
How far back can the IRS go for unfiled returns?
The IRS can go back an unlimited amount of time to demand an unfiled return or to assess tax in a period when you didn’t file. There’s no statute of limitations on unfiled returns.
Work With McLaud Law for Unfiled Tax Returns
It’s never worth the risk to ignore IRS notices. If you miss a filing deadline, make sure you file as soon as possible to avoid additional penalties and interest charges. If you continue to do nothing and you owe money, the IRS may get more aggressive with its collection tactics, pursuing liens, levies, more penalties, and wage garnishment.
When you need help with IRS Notice CP59 or filing your tax return, contact McLaud Law P.C. Our attorney and team of tax resolution professionals will help you get your tax issue resolved as quickly and efficiently as possible. Request a free consultation today or call us at 585-397-7785.
This communication is Attorney Advertising. It is presented for informational purposes only and does not constitute legal advice. Every legal situation is different, and prior results do not guarantee a similar outcome. This communication does not create an attorney-client relationship between McLaud Law P.C. and the recipient.
Sources:
https://www.irs.gov/individuals/get-transcript
https://www.irs.gov/pub/irs-pdf/f15103.pdf
https://www.irs.gov/individuals/understanding-your-cp59-notice
https://www.irs.gov/filing/time-you-can-claim-a-credit-or-refund
https://www.irs.gov/pub/notices/cp59_english.pdf
https://www.irs.gov/businesses/small-businesses-self-employed/notices-for-past-due-tax-returns
https://www.irs.gov/individuals/understanding-your-cp259-notice
https://www.irs.gov/individuals/understanding-your-cp2566-notice