If you receive IRS Letter 2566, it is a proposed individual tax assessment. This may mean that more taxes are due, and the IRS has sent you the letter as notice that they are assessing your tax obligations.
Often, this means that the IRS has no record that you actually filed a tax return. They may have proposed the amount of taxes that they believe are due. The letter allows you to get this process started, although providing more in-depth information could change the exact amount that you have to pay the IRS.
How can the IRS decide how much you owe?
Often, the IRS is going to get information from other sources. This information can still be connected to you through your tax identification number.
For example, your employer should have filed tax paperwork that includes the amount of money they paid you as an employee. Your financial institutions may have filed paperwork that includes information about transactions. This gives the IRS some idea of the money that you have received, even if they have not actually received your paperwork detailing how much you believe you should pay in taxes.
Because you have not filed, the IRS has prepared a tax return for you, and Letter 2566 will tell you how much they believe is due in taxes, interest and any necessary penalties. That said, you can still file an original tax return on your own, which may reduce the total amount that you owe.
Acting quickly
There is a deadline to reply to this notice, which is typically 30 days. If you have received Letter 2566 from the IRS, it is important to act quickly so that you do not lose your right to appeal. Be sure you know what legal steps to take.