Glossary

CP120 Notice

The CP120 notice is sent by the IRS to tax-exempt organizations to inform them that their tax-exempt status has been revoked due to non-filing of required annual returns or notices. Organizations that fail to file the necessary documentation for three consecutive years automatically lose their tax-exempt status.

Key points about CP120:

The notice explains that the organization’s tax-exempt status has been revoked, meaning it is now subject to income tax.
It provides instructions on how to reinstate tax-exempt status by submitting the appropriate forms and paying the required fee.
The organization must file Form 1023 or Form 1024 to apply for reinstatement.

Organizations receiving CP120 should act quickly to restore their tax-exempt status and avoid being taxed as a for-profit entity.

Recommendation

CP21C Notice: Changes to Your Tax Return – Balance Due

IRS CP21C Notice notifies taxpayers that changes to their tax return have resulted in an additional balance owed and explains how to pay the new balance.

IRS Form 8857: Request for Innocent Spouse Relief

IRS Form 8857 is used to request Innocent Spouse Relief, which protects taxpayers from being held liable for their spouse’s tax debt.

Form 1099-C: Cancellation of Debt

Form 1099-C is used by creditors to report canceled or forgiven debt to the IRS, which may be considered taxable income.

401(k) Contribution Limit

The 401(k) contribution limit sets the maximum amount employees can contribute to their employer-sponsored retirement plan each year, offering significant tax benefits.

Letter 2030: Notice of Proposed Changes to Your Return

The IRS Letter 2030 notifies taxpayers of proposed changes to their return, including adjustments to income, credits, or deductions, with instructions on how to respond.

Amortization

Amortization is the process of gradually deducting the cost of an intangible asset over its useful life for tax purposes.

Collection Statute Expiration Date (CSED)

The Collection Statute Expiration Date (CSED) is the date when the IRS’s 10-year window to collect unpaid taxes expires, and the debt is no longer enforceable.

CP25 Notice: Refund Adjustment Due to Estimated Tax Payments

The IRS CP25 Notice informs taxpayers that their refund has been adjusted due to incorrect estimated tax payments.

Charitable Contribution Deduction

The charitable contribution deduction allows taxpayers who itemize deductions to reduce their taxable income by donating to qualified charitable organizations.

CP297A Notice: Final Notice of Intent to Levy on Social Security Benefits

IRS CP297A Notice is a final notice informing taxpayers of an impending levy on Social Security benefits due to unpaid taxes, with options to prevent levy actions.