What to Do If You Receive a CP2501 Notice from the IRS

Published By: Chad Silver
On: February 22, 2021
Last Updated: December 26, 2022

See More in: Audits

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Tax season is quickly approaching, and it’s important to start preparing now. Many Americans opt to file their returns electronically, which means mistakes can be made. If this happens, the Internal Revenue Service (IRS) will mail a CP2501 Notice about the inconsistencies if the information in your tax return doesn’t match what other entities have reported. Here is a guide to the CP2501 notice, what to do if you receive one, how to prevent it, and tax fraud attempts to watch out for.

What Is a CP2501 Notice?

The purpose of a CP2501 Notice is fairly straightforward: The IRS has received information that you did not report on your tax return. The notice is not a bill. It’s a list of the information they need from you. The missing information could be reported by:

The notice informs you of their findings and requests that you provide an explanation or confirm the changes. It may take several months for the IRS to contact you if there is a discrepancy, especially if there are multiple entities reporting information about you.

What to Do If You Receive a CP2501 Notice

Follow these three steps when you receive a CP2501 notice:

1. Read Through the Notice

Carefully read all the details provided to understand what’s missing from your tax return.

2. Check Your Records

Check your tax return and all applicable records to see what could have gone wrong in your reporting.

3. Respond Promptly

If you agree with the changes proposed by the IRS, look for the notice’s response form. Sign where indicated and return it as instructed in the letter.

You can quickly resolve the issue when you know the information is incorrect, especially if you can work it out with the employer or business that sent the incorrect income statement. You will simply:

Contact the entity that provided the information
Ask them to correct it if what they reported was wrong
Follow the instructions on the notice for when you believe the information is incorrect

Pay close attention to the deadline for a response. CP2501 Notices have a 30-day period for you to either complete the form or contact the IRS via phone or regular mail. The IRS will send another letter with their proposed changes and any additional fees or taxes you need to pay if you fail to respond to the notice in time.

6 Ways to Prevent Getting a CP2501 Notice

Follow these tips next time you’re preparing your tax return to avoid getting a CP2501 notice and the headaches that come along with it.

1. Keep Detailed Records

Always keep track of all applicable tax forms and sources of income, so you can easily reference documents when faced with an IRS request. Accurate record-keeping will also ensure that you report everything correctly the first time on your tax return.

2. Wait to File Until You Have All the Forms

A common mistake that leads to a CP2501 form is submitting your tax return before you’ve received all income statements and tax forms from your employers, clients, banks, and other income sources.

3. Include All Income

It is important to include every income source on your tax return, no matter how it was paid.

4. Make Sure Forms Are Correct

Double-check the forms you received from all applicable entities before you file. Compare them with your own records to ensure accuracy.

5. File an Amended Return if Needed

File an amended return if you did leave information off. That way the final record will be accurate.

6. File Electronically

Filing your taxes online can help you avoid mistakes since the information is easier to review. You may also find deductions or credits you didn’t know about. Be prepared with the right records and double-check all the information, so everything in your tax return is accurate and true.

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Warning Signs of Tax Fraud

Many tax scammers try to contact taxpayers posing as an IRS representative to steal personal information or a tax refund. Watch for these warning signs:

You receive a letter from the IRS about a tax return you didn’t file, which could mean someone filed a fraudulent return with your information.
You are unable to file your return because the system says you’re using a duplicate SSN.
You receive an email, text message, or social media message from someone claiming to be from the IRS. The IRS will never contact you through these channels.
You receive a notice from the IRS about any activity, like opening an online account, that you did not initiate or cannot verify.

You can send suspicious correspondence to [email protected]. If you’re unsure whether a communication you received is legitimate or not, ask a tax professional for assistance, so you don’t share any personal information with an identity thief.

Why Working with a Tax Professional Can Help

Contact the tax audit defense professionals at Silver Tax Group if you receive a CP2501 notice and are unsure of what to do next. Our team cagn ensure you respond appropriately to the letter. If there is an inconsistency in the information, an expert can help you make sense of it and work things out with the IRS.

We are here to help. If you have any questions about your tax return or notice you received, reach out to talk to a tax attorney about the issue. We understand tax regulations and make sense of what the government is requesting. Contact us today.