What This Notice Means
This is the fourth and final notice about underreported or unpaid interest and dividend income on your Form 1040. If you don't resolve it by the date on the notice, the IRS will send a final "C" notice and put backup withholding into effect.
You've had three chances already. This is the last one before withholding starts.
What Backup Withholding Means for You
The IRS will instruct the payers of your interest and dividends, typically banks and brokerages, to withhold a percentage of tax from your future payments. Payers keep withholding until the IRS tells them to stop, or until you give them written certification from the IRS that you're no longer subject to it.
In practice, every interest and dividend payment you receive gets cut before it reaches you. Getting it turned off after it starts takes time and paperwork. Fixing the problem now is easier.
What to Do Before the Deadline
- Review your filed Form 1040 for interest or dividend income you didn't report.
- File Form 1040-X, Amended U.S. Individual Income Tax Return, for any underreported interest or dividend income.
- Pay all taxes owed on that income. Check your balance and payoff amount in your IRS online account.
How to Find the Problem
Gather every Form 1099-INT and 1099-DIV for the year. Compare them line by line to your return. If you're missing forms, order a wage and income transcript to see what payers reported to the IRS.
If you believe the IRS is wrong and you reported everything, gather your proof now and call the number on your notice before the date on the notice. Don't let the date pass while you sort it out.
IRS Publication 1335, Underreporter Backup Withholding Questions and Answers, explains the process in more detail.
Going Forward
- File on time.
- Report all interest and dividend income.
- Pay all taxes due.
If you received a CP539 and need to resolve this before withholding starts, call us at (813) 229-7100.