How to Deal with IRS CP59 Notice For High-Income Non-Filers – A Guide for Expats
If you’re a U.S. person earning over $400,000 and haven’t filed for years, you might soon receive an IRS CP59 notice. This notice calls for immediate action. You must either submit your tax returns or explain why you’re not required to file with the IRS.
Ignoring the notice isn’t an option. Receiving this letter means the IRS already knows you haven’t filed a required tax return, and they won’t stop until you file a tax return and collect what you owe. If you don’t take action, you could end up paying double due to accruing interest and penalties, facing a levy, or even risking criminal charges if your non-filing amounts to tax evasion.
If you haven’t received the letter yet, don’t celebrate.
With funding from the Inflation Reduction Act, the IRS has intensified its efforts to enforce compliance among high-income earners who haven’t filed since 2017. The agency plans to send out 125,000 CP59 notices, including 100,000 cases for individuals earning between $400,000 and $1 million and 25,000 cases for those with incomes over $1 million.
However, low and middle-income earners shouldn’t ignore their tax responsibilities either, as the IRS could come after you next.
Your Next Steps
A CP59 notice requests that you submit your unfiled returns. Check the notice to determine which tax years are in question. If you need to file, do so immediately. Include your payment for any owed taxes with your return, or pay it online through the IRS website. Remember that penalties for late filing increase with the amount of unpaid tax and the length of the delay. The longer you delay filing, the more you owe.
However, if you believe you don’t need to file, you must complete form 15103, attached to the IRS CP59 notice. Fill out the contact information section and specify the tax year you don’t need to file. Check your filing status and see if the circumstances listed on the form apply to you. Then, enter your total income and explain why you don’t need to file.
Complete the same form if you received CP59 but have already filed. You must include a signed and dated copy of the return with form 15103. Submit it to the address indicated on the letter.
The Risks of Ignoring a CP59 Notice
Ignoring a CP59 notice leads to significant penalties for failure to file and pay. The penalty for not filing starts at 5% of the unpaid tax for each month your return is overdue, up to a maximum of 25%. Additionally, the penalty for failure to pay is 0.5% of the unpaid tax for each month it remains unpaid. These penalties quickly add up and can significantly increase your tax bill.
Beyond these penalties, non-filers who ignore the letter may face more severe enforcement actions, including an audit, collections, or even criminal charges if the IRS suspects fraud.
The IRS may also file a Substitute for Return (SFR) on your behalf using information from your employer or bank. This return won’t include any credits or deductions and often results in higher tax bills.
After filing the SFR, you have 30 days to file your return or respond to the IRS—failure to do so results in a Notice of Deficiency, which outlines the proposed tax assessment.
If you agree with the assessment, sign the waiver form and pay the amount stated. If you disagree, you have 90 days to challenge the decision. Failing to act can lead to collection actions such as levies or liens.
Advice From Our Seasoned Experts
Receiving a letter from the IRS is a serious matter. Ignoring it won’t make it go away—in fact, it will only get worse.
If you haven’t received a notice yet but haven’t filed your taxes, don’t wait. File your returns before the IRS does it for you. Filing on your own ensures you receive all eligible deductions and credits, potentially lowering your tax bill or even resulting in a refund.
If you’ve recently received an IRS CP59 notice, act immediately to prevent further action. If you’re unsure how to proceed, consult a qualified tax professional.
Our team of Enrolled Agents and CPAs at Tax Samaritan specializes in working with the IRS. We help our clients achieve favorable tax resolutions. With us, you’ll never fear taxes or the IRS again. We guarantee our work and won’t nickel-and-dime you if you have questions, face an unusual situation, or even if the IRS audits you (no matter the reason).
For tax preparation and resolution assistance, call us at 775-305-1040 for a free 15-minute, no-obligation consultation.