Letter 2030: Notice of Proposed Changes to Your Return

The Letter 2030 is issued by the IRS to inform taxpayers of proposed changes to their tax return. These changes are often the result of discrepancies between what the taxpayer reported and information provided to the IRS by third parties (e.g., employers, banks, or other financial institutions). The IRS proposes adjustments to income, credits, or deductions based on their findings.

Key elements of the Letter 2030:

• Explanation of Proposed Changes: The letter will provide a detailed explanation of the proposed changes to the return, such as adjustments to income, recalculations of credits like the Earned Income Credit, or the disallowance of deductions.
• Taxpayer Response: Taxpayers have the right to accept or dispute the proposed changes. The letter will include instructions for how to respond, either by agreeing to the changes and paying any additional taxes owed or by disputing the changes and providing documentation to support the original return.
• Impact on Tax Liability: If the taxpayer accepts the proposed changes, the letter will outline how these adjustments affect their overall tax liability, including any additional taxes owed, penalties, or interest.
• Consequences of Inaction: If the taxpayer does not respond to the letter by the deadline provided, the IRS will assume the changes are accepted and assess any additional taxes or penalties.

The Letter 2030 is important because it gives taxpayers the opportunity to resolve discrepancies before the IRS makes final adjustments, potentially reducing penalties or avoiding further action.