IRS Notice CP2566: the IRS has prepared your return for you
With no return on file, the IRS has calculated your tax, penalty and interest from what employers, banks and others reported. It is a proposal. You can file your own return instead, and for most people that is the single largest reduction available.
THE CLOCK — RESPOND BY THE DATE ON THE NOTICE
The IRS asks you to respond by the date shown on the notice, either by filing your return or by accepting its proposed amount. If you do neither, it sends a Notice of Deficiency, CP3219N, which gives 90 days to file your return or petition the Tax Court. After that, the proposed amount is assessed.
What the IRS has done
The CP2566 says the IRS did not receive your return, so it calculated your tax, penalty and interest from the wages and other income reported to it by employers, financial institutions and others. This is the automated substitute for return program.
It is a proposal, not yet an assessment. The notice gives two choices: file your own return, or accept and pay the proposed amount. The IRS says filing may reduce the amount due if you are eligible for certain expenses or deductions.
If you do not think you had to file at all, the IRS says to call the number on the notice.
What the IRS does not know about you
The IRS's wider guidance on past-due returns says a substitute return might not give you credit for deductions and exemptions you are entitled to. The reason is structural: it is built from information returns, and information returns report income, not costs.
COMMONLY MISSING FROM A SUBSTITUTE RETURN
- Business expenses against self-employment income reported on 1099s
- Cost basis on securities or property sales, where the proceeds were reported but not what you paid
- Dependents and the filing status that goes with them
- Itemized deductions and credits the IRS has no third-party record of
- Payments or withholding that were not matched to your account
The IRS's wording is that a substitute return might not give you credit. The gap is widest for the self-employed and for anyone who sold investments, because those are the cases where costs matter most.
Filing your own return instead
The IRS says that if it files a substitute return, it is still in your interest to file your own, and that it will generally adjust your account to reflect the correct figures.
Returns from the past two years can be e-filed through a provider that offers the service. Older ones are mailed with the response form from the end of the notice, in the envelope provided. On a joint return, both spouses sign.
If you need the income figures the IRS used, the wage and income transcript shows them, and Form 4506-T requests it for tax years not available online. The return you file should start from those figures and add everything the substitute left out, documented well enough to survive a question.
If the date passes
The next letter is the Notice of Deficiency, CP3219N. The IRS says you will have 90 days to file your past-due return or petition the Tax Court, and that if you do neither it will proceed with its proposed assessment. It also says you cannot request an extension to file once a CP3219N has been issued.
After assessment, the balance moves into the collection notices: a bill, reminders, and eventually the final notice of intent to levy. Filing an original return later is still possible and still usually reduces the balance, but it is then a correction to an assessment rather than a response to a proposal.
Do not confuse CP3219N with CP3219A. Both are 90-day letters, but CP3219A follows an income mismatch on a return you did file, and is answered with documents. CP3219N follows a return you did not file, and is answered with the return.
Where this comes from
The statutes behind this page, so you can check any of it rather than take it on trust.
- IRC §6020(b)
- The IRS's authority to make a return for someone who has not filed. A return made this way is treated as good and sufficient for legal purposes.
- IRC §6212
- The notice of deficiency, sent here as CP3219N, which must precede assessment of the proposed tax.
- IRC §6213(a)
- The 90-day period to petition the Tax Court after a notice of deficiency.
- IRC §6501(c)(3)
- No time limit on assessment where no return was filed. Filing your own return is what starts the normal period.
This page explains what the IRS or the Massachusetts Department of Revenue does and cites the statute. It is not advice about your situation, which depends on facts none of this knows. Tell us what your letter says and what date is on it. Please do not send Social Security numbers or tax documents through the form.
Notice CP59
The IRS has no record of a prior-year personal return. It wants the return, or an explanation of why none is due. It is the first letter in a sequence that ends with the IRS preparing the return itself, from only the income it knows about.
Unfiled tax returns
Almost every serious collection case has unfiled periods behind it. Nothing else can be resolved until they are in — and the returns the IRS prepares in your place are, by design, the worst possible version of your tax position.
Notice of Deficiency
The letter that ends the administrative stage. It carries the only window in which you can have a court decide the amount before paying it, and that window is statutory.
Catching up unfiled returns
Most tax problems start here, and no resolution is approved until the returns are in. The work is records first, returns second, and it serves the IRS and the Department of Revenue from the same file.
Questions about notice cp2566.
- Is a CP2566 a bill?
- No. It is a proposed calculation of tax, penalty and interest based on third-party income information, sent because the IRS has no return from you. It becomes a bill only after the deficiency procedure runs its course.
- Should I accept the IRS figure or file my own return?
- The IRS says filing may reduce the amount due if you are eligible for expenses or deductions, and that filing your own return after a substitute is generally in your interest. Accepting makes sense only where the IRS figure already matches what your return would show.
- What is a CP3219N?
- The notice of deficiency that follows an unanswered CP2566. The IRS says it gives 90 days to file your past-due return or petition the Tax Court, and that it will assess the proposed amount if you do neither.
- Can I e-file a past-due return in response?
- The IRS says returns from the past two years can be filed electronically through a provider that offers it. Older returns are mailed with the response form from the notice, in the envelope provided.
- The income on the notice is wrong. What do I do?
- The IRS says to contact the payer for a corrected Form W-2 or 1099 and attach the corrected forms to your return. Your return should report the correct figures with the documents that support them.
Tell us what the letter says and what date is on it.
Scope and price in writing before anything starts. Where what you need is something we do not do, you will be told that instead.
Please don't send Social Security numbers or tax documents through this form.