What This Letter Means
Letter 5043 is titled "Notification of Possible Income Underreporting." It goes to a business whose return and Forms 1099-K, Payment Card and Third Party Network Transactions, show an unusually high portion of gross receipts from card payments and other 1099-K reportable transactions.
The IRS compares that to other businesses of your type. Those businesses consistently get a much lower share of receipts from cards and payment networks and a higher share from cash and checks. The IRS reads the gap as a sign that cash or check receipts may be missing from your return.
What's in the Letter
- The gross receipts you reported.
- The total card and third party network payments reported on Forms 1099-K.
- Each Form 1099-K filer and the amount it reported.
The letter comes with a copy of the letter, a return envelope, an amended return form (Form 1040-X or Form 1120-X), and Publication 3498-A, The Examination Process (Examinations by Mail).
What to Do
- Check the Forms 1099-K. If any are inaccurate, tell the IRS in writing which ones and why.
- Review your records for all receipts: card, cash, checks, and other sources.
- If you underreported, complete and send the enclosed amended return to report the additional gross receipts.
- If your return was correct, send a written explanation of why your share of card and payment network receipts is higher than expected.
- Send your response within 30 days from the date of the letter, in the envelope provided. Keep copies and use certified mail.
What Happens Next
The IRS reviews your amended return or explanation. It will contact you if it needs more information or proposes a change to your tax. Otherwise, you'll get a follow-up letter saying no further action is required.
The letter warns that failing to fully account for your income may lead to further enforcement action and additional penalties. Don't ignore it.
If you received Letter 5043 and need help explaining your receipts to the IRS, call us at (813) 229-7100.