Letter 2566 has been restyled by the IRS & it is now called "Notice 2566" or "Notice CP2566". A new Notice 2566-R has been added. Notice 2566 is a dangerous letter to receive.
It is essentially a Return Request but with the assured doom of an assessment if you default. The IRS is taking the information they have about you and constructing a return for you - without any deductions. But, they are also going to send a Notice of Deficiency if you do not respond adequately.
The letter invites you to either sign and agree to the amount, file a return or write a letter explaining any reasons why you don't have to file. But, for any of these choices, there are correct methods for doing them as well as positive and negative implications for each option available.
Implications of Letter 2566
The IRS only sends Notice 2566 if they believe you owe. Therefore, it is vitally important to off-set their proposed assessment with your evidence. However, it is equally important to be patient & explore your options, beforehand.
This is NOT an audit & it might be resolved with simple return filings. However, it is not wise to rush to file returns. We need to get the IRS file and devise a tactical Action Plan for your specific circumstances.
Steps in Response to Letter 2566
Obviously, you will have to file a return. You just need to get information to comply. Therefore, the first step will be to obtain your Wage & Income Transcripts. From there, you can determine what filings need to be made.
But, since you are filing a new return there actually may be opportunities to gain from the advantage of hind-sight.
At this point, there is no assessment, so no fear of levies. But, unless you respond, the IRS will next send you a Letter 3219, Notice of Deficiency. This means you'll either have to go to Tax Court, file a return or default and owe a big tax bill.
Futility of Writing Letters to the IRS
Writing a letter to the IRS will likely not resolve your account. The IRS has specific forms & procedures which must be followed & writing letters to them does not initiate a process to resolution. The IRS misleads you when they invite you to simply "write a letter".
Steps for Unfiled Returns
Since there have been no assessments, you still have time to resolve your case. Don't panic and rush to file!
First, look at the issues stated on the Letter 2566. Usually, the IRS claims you made more income or you are not entitled to a filing status or dependency exemptions.
We need to discover the IRS file, determine what filings should be made, prepare those filings, review any statute of limitations issues and if everything is adequate, resolve your case through normal channels. These are usually easy cases and you should not have to Appeal.
But, over-reacting will cost you!
Lost Documents
Sometimes people have misplaced or lost records they need to prepare returns. However, the attorneys here are masters are reconstructing records! Please follow the TaxHelpLaw Lost Documents Prep Steps. Our goal is the truth!
Steps for Tax Debt
If you owe the IRS pay it immediately to avoid high penalties and interest - even if you have to borrow. If the IRS puts a lien on you a loan will be nearly impossible to obtain.
But, if you can't pay, please follow the TaxHelpLaw Collections Prep Steps and contact Mr. Hopkins!
Mr. Hopkins can help you decide which path to choose. It's better to take care of any problems before they are serious so please follow the Prep Steps for IRS Letter 2566 and come see us!
Various Types of IRS Notice CP2566:
