If you're a Marylander who owes outstanding taxes, pay very close attention if you receive a CP531 Notice from the Internal Revenue Service (IRS). This is not a notice to ignore. If you do, you'll literally be paying for it.
RECOGNIZING A CP531 NOTICE
IRS notices always have a box to the right that will contain the notice number (CP531), the tax year it pertains to, the date, your Social Security Number, a control number, and phone numbers to reach the IRS.
There will also be a note explaining the purpose of the notice, in this case, backup withholding.
THE SIGNIFICANCE OF A CP531
A CP 531 Notice is not a bill. Instead, its purpose is to notify you that the IRS has concluded that you failed to report or pay taxes on income that you earned, either interest or dividends. This often occurs when a taxpayer's income tax filing is inconsistent with a third party's filing.
Therefore, the IRS is informing you that you may be subject to backup withholding, which is currently set at 24%.
WHAT YOU SHOULD DO IF YOU RECEIVE A CP531
First, review the document to determine the required date by which you must respond.
You'll need to review your Form 1040, and if you missed any interest or dividend payments, file an amendment to the 1040.
However, if you disagree with the IRS—for example, you believe that the notice is due to an error on the third party's or the IRS's fault—it is possible to challenge the IRS. But you have to begin the process as soon as possible.
If you fail to address the debt claimed by the IRS, the IRS will notify the payer to begin backup withholding, and it will continue until the IRS notifies the payer or payee that the agency has concluded that the payee is no longer subject to the withholding.
HOW AN EXPERIENCED TAX ATTORNEY CAN HELP
If you have received a CP531 Notice, a tax attorney can review your tax filings to help you determine if you have sufficiently included the interest and dividend income on your filings and if you have any additional liability.
If you don't have any liability, a tax attorney can help you challenge the notice, representing you before the IRS and, if needed, in tax court.
If you do owe additional taxes, a tax attorney will help you determine any additional or amended filings that you will need to complete. The attorney can help you work out a payment plan with the IRS or negotiate a settlement—with the potential for reducing the amount you owe, even to zero, as Gabaie & Associates were recently able to do for one of the firm's clients.
Maryland tax attorney Gabaie & Associates has offices in Baltimore, Annapolis, Rockville, and Columbia, and Juda Gabaie specializes in helping business owners with taxes. We can review your current tax liability, help you work with the IRS to resolve any debt and come up with ways to help you avoid future issues.
Contact Gabaie & Associates, LLC today by calling us at (410) 358-1500 or by emailing us to schedule a free consultation.
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