The CP23A Notice is sent by the IRS when there is a discrepancy between the estimated tax payments reported on a taxpayer’s return and the payments that the IRS has on record. Estimated tax payments are typically made by self-employed individuals or those with significant income outside of regular wages, and this notice is a way for the IRS to address mismatches in these payments.
Important aspects of the CP23A Notice:
- Explanation of Discrepancy: The notice will provide a breakdown of the estimated payments reported on the taxpayer’s return versus what the IRS has on file. If the IRS finds that payments were underreported or overreported, the notice will explain how the discrepancy was addressed.
- Impact on Refund or Balance Due: Depending on whether the taxpayer underpaid or overpaid their estimated taxes, the CP23A may result in a reduced refund or an additional balance due. The notice will specify the corrected refund amount or the amount that the taxpayer now owes.
- Next Steps: If the taxpayer agrees with the adjustments, no further action is needed beyond paying any balance due by the specified deadline. If the taxpayer disagrees with the changes, they can submit documentation to dispute the discrepancy.
- Penalties and Interest: If the discrepancy results in an underpayment of taxes, the IRS may assess penalties and interest on the unpaid balance. The CP23A will include information on how these charges were calculated.
It’s important for taxpayers to review the CP23A carefully to ensure that all estimated payments were properly credited.