IRS Letter 5039 – Income Reporting Verification Notice
The IRS needs verification of the income that was reported to the IRS by credit card merchants and/or third-party networks on Forms 1099-K.
Type of Notice: Return accuracy
Likely next step: Address a business audit
Why you received IRS Letter 5039
- You received income through a credit card merchant account and/or through other third-party network transactions.
- You filed a tax return reporting business income.
- The IRS thinks that your tax return shows an unusually high portion of gross receipts attributable to credit card payments. The IRS would typically expect a higher portion of gross receipts from cash and checks for your type of business.
- Letter 5039 was sent to ask you to complete the attached Form 14420, Verification of Income. If additional income should be reported, you are asked to attach an amended return to your response. If there is no additional income, then you need to explain why the portion of receipts from credit card sales is higher than expected.
Notice deadline: 30 days
If you miss the deadline: Failure to respond may result in the IRS auditing the tax return or sending a notice proposing additional tax, penalties and interest.
Want more help?
Your tax professional can deal with the IRS for you. Learn more about H&R Block’s Tax Audit & Notice Services.
Letter from the IRS?
Your local H&R Block tax pro can look into it for you.Schedule a Free Consultation
Understand the most common types of IRS business tax penalties for filing and paying late, and your possible options for requesting IRS penalty relief.
Learn what the IRS is looking for during a business tax audit, the steps you should take to prepare for an IRS audit, and when it's best to get expert help.
Learn how to request an IRS payment option, like an extension to pay or an IRS installment agreement, when your business owes taxes and can't pay.