Tax Blog

Received a Notice CP3219A? Here’s Why and What You Need to Do

George Dimov November 10, 2020

What is Notice CP3219A?

Tax notice CP3219A is a notice sent by the Internal Revenue Service (IRS) to taxpayers who have filed a petition with the United States Tax Court. This notice is sent to confirm that the IRS has received the taxpayer’s petition and to provide important information about the case.

Key points about CP3219A:

Acknowledgment: The notice acknowledges that the taxpayer has filed a petition with the Tax Court to dispute a Notice of Deficiency or a Notice of Determination.
Docket number: The notice includes the docket number assigned to the case by the Tax Court, which should be used in all future correspondence related to the case.
Tax Court’s copy: The notice confirms that a copy of the taxpayer’s petition has been sent to the Tax Court.
IRS attorney assignment: The notice informs the taxpayer that an IRS attorney will be assigned to the case and will contact the taxpayer or their representative to discuss the disputed issues and the possibility of settling the case without a trial.
No immediate action required: The taxpayer is not required to take any action upon receiving this notice, as it is purely informational.

Receiving a CP3219A notice is a standard part of the process when a taxpayer files a petition with the Tax Court. The assigned IRS attorney will work with the taxpayer to resolve the disputed issues, either through settlement negotiations or by proceeding to trial if a settlement cannot be reached.

What’s The Role of Notice CP3219A in the Tax Dispute Process?

Notice CP3219A plays a crucial role in the tax dispute process when a taxpayer files a petition with the United States Tax Court. This notice serves as an acknowledgment and confirmation of the taxpayer’s actions, and it initiates the legal process to resolve the dispute.

Here’s how CP3219A fits into the tax reporting and dispute process:

Taxpayer files petition: When a taxpayer receives a Notice of Deficiency or a Notice of Determination from the IRS and disagrees with the proposed adjustments, they may file a petition with the Tax Court to dispute the IRS’s findings.
IRS sends CP3219A: Upon receiving the taxpayer’s petition, the IRS sends notice CP3219A to confirm receipt of the petition and to provide the taxpayer with important information about their case, such as the assigned docket number.
Case initiation: The issuance of CP3219A signifies that the taxpayer’s case has been officially initiated with the Tax Court, and a copy of the petition has been forwarded to the court.
IRS attorney assignment: The notice informs the taxpayer that an IRS attorney will be assigned to their case. This attorney will serve as the primary point of contact for the taxpayer or their representative throughout the dispute process.
Settlement discussions: The assigned IRS attorney will contact the taxpayer or their representative to discuss the disputed issues and explore the possibility of settling the case without going to trial. This step is crucial in resolving the dispute efficiently and avoiding the time and costs associated with a formal trial.
Resolution: If a settlement is reached, the IRS and the taxpayer will sign a stipulated decision, which will be submitted to the Tax Court for entry. If a settlement cannot be reached, the case will proceed to trial, where a judge will hear arguments from both parties and render a decision.

Notice CP3219A serves as a vital communication tool between the IRS and the taxpayer, ensuring that both parties are informed about the status of the case and the next steps in the dispute resolution process. It also helps to facilitate a more efficient resolution by connecting the taxpayer with an IRS attorney who can work towards settling the case.

What’s the Difference Between Notice CP3219A and Notice CP2000?

Notice CP3219A and Notice CP2000 are both issued by the IRS but serve different purposes and apply to different situations in the tax reporting and assessment process.

Purpose:

CP3219A: Acknowledges receipt of a taxpayer’s petition to the Tax Court and provides information about the case.
CP2000: Proposes changes to a taxpayer’s tax return based on information the IRS has received from third-party sources, such as employers or financial institutions.

Situation:

CP3219A: Issued after a taxpayer files a petition with the Tax Court to dispute a Notice of Deficiency or a Notice of Determination.
CP2000: Issued when there is a mismatch between the information reported on a taxpayer’s return and the information reported to the IRS by third parties.

Taxpayer Action:

CP3219A: No immediate action is required from the taxpayer, as the notice is informational and confirms the initiation of the Tax Court case.
CP2000: The taxpayer must review the proposed changes, gather supporting documentation, and respond to the IRS within the specified time frame (usually 30 days) to either agree with the changes or dispute them.

Legal Implications:

CP3219A: The case is now under the jurisdiction of the Tax Court, and an IRS attorney will be assigned to work with the taxpayer to resolve the dispute.
CP2000: If the taxpayer agrees with the proposed changes or fails to respond, the IRS will assess the additional tax, interest, and penalties. If the taxpayer disagrees, they must provide evidence to support their position.

Reasons for Receiving Notice CP3219A

Receiving a Notice CP3219A from the IRS can be unsettling, but understanding why it was issued can help you resolve it efficiently. This notice typically follows a CP2000, which is sent when the IRS detects discrepancies between the tax return you submitted and information from other sources, like employers or financial institutions.

Mismatched Information

The IRS compares the information you report on your tax return with data received from third parties. Discrepancies can lead to the issuance of a CP2000. If this preliminary notice is not responded to within the designated timeframe, a CP3219A is then issued, potentially with additional tax, interest, and penalties.

Common Triggers for the Notice

Unreported Income:

Securities Transactions: For example, if you sold stocks and did not report the capital gains, even though your broker issued and submitted a Form 1099-B to the IRS.
Retirement Withdrawals: Not reporting early withdrawals from retirement accounts like 401ks or IRAs.
Debt Forgiveness: Failing to report forgiven debt which is considered taxable income.
Gambling Income: Gambling winnings need to be reported even if they are offset by losses.

Incorrect Filing Status:

This can occur if you choose a filing status that does not accurately reflect your marital or family situation, affecting your tax calculations.

Errors in Reported Payments or Credits:

Incorrectly reporting estimated tax payments, withholding amounts, or tax credits, which leads to mismatches in the IRS system.

Examples of Real-Life Scenarios:

Restricted Stock Units (RSUs) and Employee Stock Purchase Plans (ESPPs): Taxpayers may overlook these as part of their income because they assume these are covered under W-2 forms.

Business Income: Small business owners or freelancers might underreport their income due to misunderstanding how losses are accounted for. The IRS requires all income to be reported, with losses itemized separately.

The CP3219A notice also includes a statement of your rights, including how to file a petition in tax court if you disagree with the IRS’s findings. Understanding these triggers and the process of how the IRS cross-references information can help you prevent similar issues in future tax filings.

Steps to Take After Receiving Notice CP3219A

If you receive this notice, do not attempt to correct this on your own as that normally leads to further issues with the IRS. They will not accept a written explanation in most cases, if you are attempting to remove your balance owed. You must complete the missing forms and formally appeal the tax & penalties.

Do not request to go to tax court – that will increase the complexity of your case substantially. You are best off working through the traditional non-court process that we have developed over the years, which includes amending the return and using whichever abatement applies in your case (reasonable cause, FTA, etc.).

We normally ask for abatement of interest, penalties, and tax depending on the exact situation. This normally requires that we amend your return. Once we amend your return and file the IRS appeal, you will receive a letter roughly 30-60 days later from the IRS acknowledging that they received our message. Another 2-4 months later, you will receive another letter adjusting your balance. Some clients are even due a refund.

None of this is professional advice or is meant to provide professional direction. Please contact us for a custom approach to your exact notice.

Dimov Tax handle the IRS notice on a daily basis and have had expertise built up. We have a streamline process to appeal to the notice. It is not always necessary to file a petition. In some case, you can appeal to the notice without going to the Tax Court. Our success rate for our past clients has been over 95% at the first attempt. If you receive a CP3219A, don’t panic. We are happy to assist you to resolve this issue. If you have any questions, please contact us.