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Back Tax CPA discusses IRS Notice CP 88 | Delinquent Return Refund Hold

IRS Notice CP88 back tax cpa

If you need help with IRS Notice CP88, and the unfiled tax return(s), consider giving us a call at (910) 399-2705. Our virtual office allows us to help you wherever you live.

theIRS Notice CP88, Delinquent Return Refund Hold, often triggers contact with a back tax CPA. Why? Notice CP88 states the IRS doesn’t have a back tax return, and, the IRS expects the un-filed return to show back taxes due. Often, your current refund is being held hostage until you resolve  the issue.  Sometimes Notice CP 88 is the first sign that the IRS wants a delinquent return, and it can arrive years after the missing return’s due date. I’ll share my approach to working back tax cases and Notice CP88.

Can you handle IRS Notice CP88 yourself?

Maybe. This post might help you decide. But you can’t rely on this general discussion alone for your decision. Remember, even though Notice CP88 is an automated response, it’s still a low-level IRS audit. Don’t just ignore it.

What Action Would a Back Tax CPA take to resolve IRS Notice CP 88?

  • Read IRS Notice CP88, Delinquent Return Refund Hold, carefully. This sounds basic but new Clients sometimes jump to conclusions.
  • Sometimes the Client already has the missing return. The IRS just never received it, or lost it.
  • But the IRS wants more than just another copy. You must prove it was sent; typical examples include certified post receipts and e-file acknowledgements.
  • The IRS is infamous about overlapping notices. If you sent the return within the last 60 days, do nothing for a week. Then call the IRS to confirm they have it.
  • Maybe you weren’t required to file a tax return for that year. If so, the back tax CPA writes to the IRS with an explanation and requests immediate release of your current refund.
  • Sometimes CPAs request additional time to handle Notice CP88. The IRS usually allows another 8-9 weeks past the original deadline.
  • If I need to prepare a tax return for the year Notice CP88 addresses I’ll ask for your documentation. Probably I’ll call for what information the IRS has on you for that tax year.
  • Remember your State may need a tax return as well even if they’re not asking for it now.
  • Are there other missing tax returns? My belief is that once the IRS latches on to a problem in one tax year they’ll check other tax years. It just makes sense to bring the Client into full IRS compliance.
  • Late tax returns incur penalties. I like to offer a reasonable explanation why the IRS doesn’t have the past return. Sometimes they abate penalties if you had personal problems that prevented filing. Examples include being out of the country, death in the family, poor health etc.
  • In some cases I’ll look at using Form 8857, Request for Innocent Spouse Relief, or Form 8379, Injured Spouse Allocation. There are posts on both these topics, use the Forms drop down box in the right sidebar to find them.

“Try to not open up additional IRS issues during resolution of IRS Notice CP88.”
– Gary Bode, back tax CPA

Standard Consequences for Ignoring Notice CP 88

Can you just let the IRS keep your refund and not file the back tax return?

  • For awhile, maybe. But the IRS stills wants those back tax returns. Typically they give you plenty of time to comply.
  • But then they’re relentless. A barrage of ever more threatening Notices ensues.
  • Eventually they prepare a substitute return, based on the information they have for the tax year in question. Which even they admit is not to your advantage. Why? It usually calculates a demand based solely on income without considering legitimate tax deductions and credits. I think this is just a motivational tool to obtain a correct, albeit delinquent, back tax return.
  • Note that an accurate back tax return almost always results in less tax due than the IRS  substitute return.
  • If the amount of the “substitute return” is greater than your refund, collection attempts begin.
  • Usually CPAs check if you’re a candidate for an Offer in Compromise. The IRS Fresh Start program loosened the qualifications. An Offer of Compromise means the IRS accepts “pennies on the dollar” as full payment.
  • The IRS has Installment Agreements, monthly payment plan.
  • So IRS Notice CP88 could eventually lead to a federal tax lien after which they levy.

“Doing nothing about CP88 is the worst possible way to handle it.”

In most cases involving IRS Notice CP88 just providing an accurate back tax return solves the problem. We often prepare back tax returns where a refund is due! Strange but true. But sometimes you lose part of all of your current refund.

We are a back tax CPA firm with a virtual office to both serve long distant clients, and make life more convenient for our local Wilmington NC clients. We offer a free initial phone consult on IRS Notice CP 88, Delinquent Return Refund Hold, or any back tax issue. (910) 399-2705.

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