Okay, so you’ve gotten a piece of mail from the IRS with the words “CP515 Notice” at the top. Don’t panic! It’s not an audit (yet). It’s a gentle nudge—well, maybe not so gentle—telling you that the IRS hasn’t received your tax return. Think of it as the IRS’s first “hey, where’s that tax return?” letter. Let’s break down what this notice means, what you should do about it, and how to avoid getting another one.
What Does a CP515 Notice Mean?
The CP515 Notice is officially called the “First Notice of Unfiled Return.” It’s the initial communication from the IRS when they believe you were required to file a tax return, but they haven’t received it. This means they have information suggesting you had income or other tax obligations that would necessitate a filing. They’re not necessarily saying you owe taxes at this point; they’re simply pointing out that they haven’t received your paperwork.
Why Did I Receive a CP515 Notice?
The IRS keeps track of things. When they see financial activity that looks like it should be attached to a tax return they use the information they have to send a CP515 Notice. Here are a few reasons you might receive this notice:
- You didn’t file your return: The most obvious reason is that you simply haven’t filed your federal income tax return by the deadline (typically April 15th, or October 15th if you filed an extension). Sometimes we just get busy and forget!
- They have W-2 or 1099 information: Your employer or other payers send the IRS copies of your W-2s and 1099s. If this info suggests you should have filed but they didn’t receive anything, they’ll flag your account and send a notice.
- A mistake in the mail: While rare, sometimes returns get lost in the mail or misprocessed. This could also be the reason for a CP515 Notice.
- A change in filing requirements: Sometimes new changes in tax law will affect who is required to file. Your situation may be different than last year, or the tax law may have changed making you subject to filing.
What Should You Do if You Receive a CP515 Notice?
The CP515 Notice isn’t something you want to ignore. Here’s a step-by-step guide on how to handle it:
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Don’t Panic! It’s just a notice. The IRS sends these out regularly. Take a deep breath.
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Verify the Details: Carefully review the notice. Make sure the name, address, and tax year are correct. Double check everything!
3 Double Check Your Records: Go back through your records to verify if you have filed for the year in question. You will need to check your electronic filing information or for confirmation if you mailed it.
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File Your Tax Return ASAP (If You Haven’t): This is the most important step. If you haven’t already filed your tax return for the year specified in the notice, do it now. The quicker you file, the better. Even if you can’t pay the amount due, filing is important to prevent penalties. You can use IRS Free File if you qualify for free filing. If you do not qualify for free filing, you will need to get help filing yourself or hire a tax professional.
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If You Already Filed: If you believe you have already filed your return, and have proof, then there might be a problem on the IRS end. To clear the issue, you should contact the IRS and let them know that you have already filed. You can also mail copies of your tax return and proof of mailing.
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Consider an Extension: If you know you’re going to need more time to file, you can file for an extension (Form 4868). It is not automatic, you still need to apply. Keep in mind that filing an extension only extends the time to file not to pay. Any taxes you owe must still be paid on time to avoid late payment penalties.
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Contact the IRS If Needed: If you have any questions or are unsure about what to do, you can call the IRS using the phone number provided on the notice. Have all the paperwork ready when you make the call.
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Keep Copies: Always keep copies of any correspondence you have with the IRS. This will be essential if you need to clarify anything later.
What Happens if You Ignore the CP515 Notice?
Ignoring a CP515 Notice isn’t wise. The IRS won’t just forget about your unfiled return. Here’s what can happen:
- Failure-to-File Penalties: These penalties accrue each month (or part of a month) that your return is late, up to a maximum of 25% of the tax owed.
- Interest: You’ll also be charged interest on any unpaid taxes, starting from the due date of the return.
- Additional Notices: If you don’t respond to the CP515, the IRS will send more notices – potentially more serious ones.
- Substitute for Return: If you still don’t file, the IRS can file a substitute for return (SFR). This is a return they prepare on your behalf based on the information they have, which is generally not in your best financial interest as it won’t take into account any deductions or credits you would normally be entitled to.
- Further Actions: If the issue is unresolved the IRS can also take other actions, including liens, levies, and wage garnishments.
Common Mistakes and Misconceptions about CP515 Notices
It’s easy to misunderstand the CP515. Here are some common misconceptions:
- “I don’t owe any taxes, so I don’t need to file.” This isn’t true. Even if you don’t owe, if you meet certain income thresholds or have other filing obligations, you are still required to file.
- “The IRS will just figure it out.” While the IRS can prepare a substitute for return, this does not mean you don’t need to file. It is always better to file yourself or with a tax professional.
- “I filed my return, so it’s not my problem.” You still need to clear it up if the IRS says they didn’t receive it. You’ll need to provide proof of filing or re-file.
Tips to Avoid CP515 Notices
The best way to avoid receiving a CP515 Notice is to stay on top of your taxes. Here are some helpful tips:
- File on Time: Make a note of tax deadlines and file your return on time (or request an extension).
- Keep Accurate Records: Maintain organized records of all income, expenses, and tax-related documents.
- Use IRS Resources: The IRS website has many resources to help you understand your filing requirements.
- Consider Professional Help: If you’re unsure about your tax situation, work with a qualified tax professional.
In Summary
The CP515 Notice is an alert from the IRS that they haven’t received your tax return. Don’t ignore it. Take action immediately. Double-check your records, file or refile your return, and contact the IRS if necessary. Keeping up with your filing obligations is always the best way to avoid a headache from the IRS!