IRS Notice CP22A: What It Is and How to Respond

The IRS Notice CP22A is a notification to a taxpayer that the IRS has adjusted their total tax liability, following changes made to their tax return (Form 1040).

This adjustment can result in either an increase (e.g., due to underreported income) or a decrease (e.g., due to penalty abatement) to your overall tax bill.

But the bottom line is you owe the IRS.

The Notice CP22A will always list the reasons behind why an adjustment to the amount you owe has been made, and the adjustment is always a result of new information that the IRS has received, resulting in an updated Form 1040 for the given tax year.

Here is a redacted version of a CP22A Notice that the IRS sent one of our clients for underreported income on their tax return.

Here is a redacted version of a CP22A Notice that the IRS sent one of our clients after we got some of their penalties abated.

IRS Notice CP22A At a Glance

IRS Notice CP22A Explained, Part by Part

Here is a full explanation of the Notice CP22A, part by part.

Remember that some of the details within your CP22A will vary depending on the particulars of your case, especially on the first page where it lists the reasons why your tax bill has been adjusted.

Part 1: Billing Summary

On the first page you’ll see the primary purpose of this notice: you owe money to the IRS.

Specifically, you provided information that resulted in a change to your tax return (Form 1040).

As we can see listed here, based on the information that was provided, the IRS has updated your tax return due to changes in one or more of the following categories:

• Investment gain or loss
• Earned income credit
• Interest and/or dividend income

On the right side is the billing summary itself, which lists one by one the specific charges against your account.

We can see in this example there’s an increase in the total tax liability, as well as a decrease in the credit (the EIC listed on the left).

The Earned Income Credit is a refundable tax credit, designed to reduce the total tax bill for low to moderate-income families.

An increase in the tax bill and a decrease in this credit makes it clear that this is a CP22A that has been sent due to under-reported income.

On top of that there’s also an increase in the form of an “accuracy-related penalty on underpayments penalty”, so in other words the IRS is penalizing this taxpayer for under-reporting their income, related to an investment gain or interest/dividends.

Finally there’s an increase in interest owed, as the total tax owed itself has been assessed to have increased.

Part 2: Payment Coupon

The next section is the payment coupon you can attach, along with a check or money order, to pay the IRS.

On the payment coupon you’ll find the total amount owed, as well as the date the IRS wants you to pay it by.

Above that there are some brief instructions on how to pay and what information you need to include on both your payment and any form of correspondence with the IRS.

This will ensure that your tax payment is processed correctly.

Part 3: What You Need to Do Immediately

This part is important, as it covers your next steps.

There are two subsections here — what to do if you agree with the changes made, and what to do if you disagree.

If you (and your tax attorney) can’t find any fault with the changes the IRS has made to your tax return, then you are directed to pay the amount either online or by mail.

The exact URL you need to visit in order to pay online is listed.

On the other hand if you disagree with the IRS, then you are instructed to call a representative at the IRS to review your account.

The very last sentence here is crucial to note: The IRS will assume you agree with this notice, and therefore your updated and increased tax bill, if they don’t hear from you.

That means it might be hard for you to legally argue your disagreement later on if you fail to respond to this notice in a timely manner.

Part 4: Payment Options

The fourth part of this Notice CP22A talks a bit about the methods by which you can pay your tax bill.

And importantly, the IRS states that if you can’t pay your balance in full now, you still have some options.

Installment agreement, offer-in-compromise, and a temporary collection delay could be eligible avenues for you to explore, depending on your circumstances.

Part 5: Penalties Information

The next part of the notice covers penalties.

First of all, the notice states that the Examining Officer assigned to your case has already provided a full report explaining the reasoning behind the penalties listed below.

Moving on to the actual penalties, the taxpayer in this example is being charged with one or more of the Valuation Overstatement, Valuation Understatement, or Substantial Understatement penalties.

These penalties will relate to various statements regarding income, assets, investments, etc.

Below that there is also listed another accuracy-related penalty for returns due after the year ending 1989, which of course includes the return in question at the top of this notice, the tax return for 2021.

Part 6: Interest Information

This part details the process by which the IRS charges interest on your tax bill, as well as the specifics of the interest charges on your account for each applicable period.

As noted here just above the table of charges, the IRS may be presenting interest charges here that are later removed from your total bill, after the adjustment has been made.

If you’re confused at all about the total amount of interest you owe, just refer to the billing summary at the top of the notice.

Part 7: Additional Information

Getting to the last page of this notice, the IRS includes several points of additional information for taxpayers to be aware of.

First of all, they list a link to the IRS website where more information about this specific notice, including a FAQ, can be found — that could be a useful place to start if you have questions.

Here the IRS gives further encouragement to make your payment online, rather than via mail, if possible.

Note the reminder not to pay the full amount owed twice, even if you and your spouse receive a copy of the same notice.

Continuing on from the previous section, the final part of this notice gives details on some of the resources available to those taxpayers in need of assistance with their case.

The Taxpayer Advocate Service (TAS) is one option for qualifying taxpayers who are suffering financially due to their tax bill, or otherwise having difficulty in resolving their tax debt issues.

This section also notes that tax professionals who are independent of the IRS can also assist you – that’s where we come in.

There’s also a note here on Low Income Taxpayer Clinics (LITCs) which can be a useful resource for those needing representation before the IRS, as well as those who speak English as a second language.

The IRS includes information on how to find a LITC near you both online and over the phone.

When the IRS Sends Notice CP22A

The IRS sends Notice CP22A when there has been a change to your tax return that resulted in an adjustment to your tax liability, i.e. the amount you owe the IRS.

This notice is typically issued after the IRS has processed a change that you or your representative (CPA, tax attorney etc) requested.

It could also be due to a correction the IRS made themselves.

The notice provides details about the change, the reason for the adjustment, as well as information on how to pay the balance.

If you receive a Notice CP22A, you can either agree and pay the balance one way or another, or disagree and contest the adjustment formally.

What You Should Do If You Receive a Notice CP22A

If you receive a Notice CP22A from the IRS, here are your next steps:

1. Review the Notice Thoroughly

As tempting as it may be to launch straight into action, it’s wise to take whatever time you need to carefully read over the document.

Make sure you understand each section as much as possible, and consider taking notes if there are any parts in particular that don’t make sense to you.

A thorough review of your notice will give you a good foundation moving forward, so be sure not to miss any details.

2. Check for Accuracy

The IRS lists what to do for if you agree or disagree with the adjustments made to your tax liability.

But in order to figure out which way you’re going there, you’ll need to verify all of the information before coming to any conclusions.

Compare the information given in the notice with your own tax records, and double check over the reasons the IRS has given for the adjustment.

The IRS does make mistakes from time to time, so don’t rush this step.

3. Consider Your Payment Options

Now, depending on the size of your tax liability, and your own financial circumstances, you may just decide it’s easier to go ahead and pay the bill in full.

However, if you disagree with the adjustment and/or total tax bill, or paying in full is otherwise not an attractive option for you, then you can and should consider alternate payment methods.

Installment Agreement (IA), Offer-in-Compromise (OIC) and Currently-Not-Collectible status (CNC) are all common potentials for those who can’t pay their tax bill in full.

Your tax attorney, CPA, EA etc can help you first of all determine which options are viable and optimal for you, and then help you take the steps toward that by communicating with the IRS on your behalf.

4. Respond if Necessary

If you’re not going to just pay the full amount right away, you or your legal representative will have to contact the IRS to respond.

If you disagree with the adjustment made and the subsequent bill, you can contact the IRS with the information given in the notice.

If you need more time to pay the bill, again you can consider various payment options offered by the IRS.

You can contact the IRS to discuss your options, or speak directly with your legal advisor who should have a fairly good idea of which payment options you could qualify for.

5. Find a Tax Pro

If you’re feeling unsure about how to respond to your Notice CP22A, or if you’re not making progress in handling it yourself, consider finding a qualified tax professional to help.

A CPA, EA or tax attorney can bring some clarity to your case and help you discern the best way forward towards resolution of your tax debt.

Author:

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Logan Allec, CPA, Founder and Owner

Logan Allec has been serving taxpayers as a CPA for over 14 years. After leaving his role at a "Big 4" firm, he started Choice Tax Relief to help everyday Americans who have found themselves behind on their taxes. He also educates thousands of people daily about tax relief on his YouTube channel. In addition to his CPA license, Logan also has a Master's Degree in Taxation from the University of Southern California (USC). He lives with his wife and children in the Los Angeles area. Learn more about Logan here.

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