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IRS NOTICES: PENALTY NOTICE

What is a CP30 notice?

Jo Willetts, EA Director, Tax Resources Published On May 05, 2020

IRS notices are letters sent to inform taxpayers of important tax information. Each one is different, but we can explain what the CP30 is about.

Understanding your CP30 notice

You have received a CP30 notice because you did not pre-pay enough taxes through withholding or estimated tax payments and the IRS charged you a penalty. You may also have been charged a penalty because your estimated tax payments were late.

The U.S. tax system is a pay as you go system. Throughout each year, you are required to pay taxes as you earn or receive income, either through withholding, on your paycheck or retirement income, or by paying estimated tax payments directly to the IRS.

NOTE: The IRS has extended the deadline for 2020 estimated tax payments due April 15 and June 15 to July 15 due to COVID-19. Learn more here.

Type of notice

This is a penalty notice due to underpayment of estimated taxes throughout the year.

Why you received the CP30 notice

You received the CP30 notice because you owe the IRS penalties for not pre-paying enough taxes throughout the year or not paying your estimated tax payments on time.

Likely next steps

As always, read the notice and any enclosures carefully to determine if you did, indeed, fail to pre-pay, either through paying too little or paying too late. You will either have your refund reduced or will need to pay the penalties directly to the IRS.

You can potentially reduce the penalties you owe the IRS if you your income was received unevenly throughout the year. You will need to complete Form 2210 which allows you to annualize your income to determine your penalty based on how your income is received. This can lower your penalty when you receive income unevenly during the year.

According to the IRS site, you might avoid a penalty if BOTH of the following are true:

  • You, or your spouse if a joint return, retired after 62 years of age or because of a disability.
  • You had a reasonable cause for not paying enough estimated tax.

CP30 Notice deadline

There is no deadline for notice CP30.

About the Author

Jo Willetts, Director of Tax Resources at Jackson Hewitt, has more than 25 years of experience in the tax industry. As an Enrolled Agent, Jo has attained the highest level of certification for a tax professional. She began her career at Jackson Hewitt as a Tax Pro, working her way up to General Manager of a franchise store. In her current role, Jo provides expert knowledge company-wide to ensure that tax information distributed through all Jackson Hewitt channels is current and accurate.

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