CP15 or CP215 Notice
3 Steps to Take After Receiving a CP15 or CP215 Notice: A common question we receive is “How to Respond to a CP15 or CP215 Notice?“In recent years, the Internal Revenue Service has significantly increased enforcement of international reporting penalties. Oftentimes, a US Taxpayer will receive notice of an international reporting penalty by way of a CP15 notice or CP215 notice. This type of IRS notice is designed to put the Taxpayer on notice of the penalty — along with providing the relevant code section of which the penalty is based. For example, two common CP15 notice penalties are: foreign gifts that fall under either Internal Revenue Code section 6039F (Form 3520) and foreign asset reporting that falls under 6038D (FATCA Form 8938). It is very important to respond timely to the notice — to ensure the Taxpayer preserves their rights to appeal. Let’s look at the basics of the CP15/215 Notice.
Evaluate the CP15 Notice or CP215 Notice (Step 1)
The most important aspect of the CP15/215notice is to determine what the due date is for a written response. Generally, the Taxpayer will have 30 days to respond to the CP15 Notice. If the taxpayer just wants to pay the penalty — that is always an option. But, most Taxpayers prefer to at least take a shot with reducing the penalty and file a penalty abatement response letter — and subsequent appeal or Collection Due Process Hearing or Collection Appeal Procedure — depending on what their overall strategy is for the case. If the recipient of the CP15 Notice misses the response due date, it will be very difficult to get the case moving in the proper direction toward and appeal — if necessary.
Reasonable Cause & CP15/215 Notices (Step 2)
When a Taxpayer is able to show that their failure to file the form timely was due to reasonable cause and not willful neglect — they are entitled to have their penalties abated (removed). There is no bright-line test to determine whether or not a taxpayer meets the requirements for reasonable cause. Thus, it is very important that the taxpayer valuate their facts and circumstances to determine if they have as sufficient facts to avoid the penalty if at all possible. One good place for the taxpayers to begin their research quest regarding CP15 Notice is with the Internal Revenue Manual (IRM).
Should You Retain an Attorney (Step 3)
Some Taxpayers prefer to take matters into their own hand — which is totally understandable. It is hard to want to hire an attorney in a situation in which a Taxpayer is not guaranteed any outcome (read: any attorney that guarantees you a result has violated the ethics rules because it is impossible to guarantee a result). But, oftentimes an attorney can successfully remove the penalty if the facts allow for it. On several occasions we have successfully avoided and eliminated penalties that were issued as a result of a CP15 Notice. For these types of matters, Taxpayers should usually avoid hiring a non-attorney since there is no attorney-client privilege with a CPA — and Kovel would not apply to these types of matters.
CP15 & 215 can be Frustrating But It is Not Hopeless
When a taxpayer receives this type of notice it can be very frustrating, because oftentimes the Taxpayer does not have any unreported income. Rather, they may have just missed reporting a form or two. But, all hope is not lost — and oftentimes taxpayers can minimize and eliminate penalties issued as a result of a CP15 or CP215 Notice.
About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS disclosure & compliance, including delinquent filing and penalty abatement.
Contact our firm for assistance.