What This Notice Means

The IRS made changes to your Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, because it found a miscalculation. The changes don't affect the amount of tax you owed.

Form 1042 is filed by withholding agents who pay U.S. source income to foreign persons. The notice tells you what the IRS adjusted on that return.

What to Do

  • Read the notice carefully.
  • Compare the figures on the notice with your Form 1042.
  • If you agree, correct the copy of the return you kept for your records. Keep this notice too.
  • If you disagree, contact the IRS within 10 days of the date of the notice.

If You Disagree

Ten days is short. Don't let this sit. Call the number on your notice and have your account information ready when you call. Have your copy of the Form 1042 and your withholding records in front of you.

If a Penalty Was Charged

Even though the tax didn't change, the notice may show a penalty. If you want the IRS to consider removing it, you must send a written request. In the letter, identify the penalty you want reconsidered and explain the reasons it should be removed. Keep a copy and send it by certified mail.

If you can't resolve the penalty on your own, the Taxpayer Advocate Service, an independent organization within the IRS, may be able to help.

Next Time You File

  • Consider filing electronically. It helps you avoid calculation mistakes.
  • Review the return for accuracy before you file.
  • Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, covers the withholding rules behind this return.

If you received a CP127 notice and want help with a penalty on your Form 1042, call us at (813) 229-7100.