{"id":30769,"date":"2017-11-03T15:01:42","date_gmt":"2017-11-03T20:01:42","guid":{"rendered":"https:\/\/www.hrblock.com\/tax-center\/?p=30769"},"modified":"2020-06-08T16:42:26","modified_gmt":"2020-06-08T21:42:26","slug":"irs-letter-5042-proposed-tax-adjustment","status":"publish","type":"post","link":"https:\/\/www.hrblock.com\/tax-center\/irs\/audits-and-tax-notices\/irs-letter-5042-proposed-tax-adjustment\/","title":{"rendered":"IRS Letter 5042 – Proposed Tax Adjustment"},"content":{"rendered":"

The IRS is proposing changes to your business tax return.<\/h2>\n
\"IRS<\/a>

Click to enlarge<\/a><\/p><\/div>\n

Type of Notice: <\/strong>Return accuracy<\/p>\n

Likely next step: <\/strong>Address a business audit<\/a><\/p>\n

Also see: <\/strong>Business penalties<\/a>, Unpaid business taxes<\/a><\/p>\n

Why you received IRS Letter 5042<\/h3>\n
    \n
  1. You received income through a credit card merchant account and\/or through other third-party network transactions.<\/li>\n
  2. You filed a tax return reporting business income.<\/li>\n
  3. 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.<\/li>\n
  4. A notice was sent asking you to explain why your gross receipts from credit cards is higher than expected, but you did not respond.<\/li>\n
  5. Letter 5042 was sent to propose changes to your tax return including additional taxes, penalties and interest.<\/li>\n<\/ol>\n

    Notice deadline: <\/strong>30 days<\/p>\n

    If you miss the deadline: <\/strong>You will lose the right to appeal the proposed increase in taxes with the IRS Office of Appeals and the IRS will issue a Statutory Notice of deficiency, which gives you 90 days to petition the U.S. Tax Court.<\/p>\n

    Want more help?<\/h3>\n

    Your tax professional can deal with the IRS for you. Learn more about H&R Block\u2019s Tax Audit & Notice Services<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

    The IRS is proposing changes to your business tax return. Type of Notice: Return accuracy Likely next step: Address a business audit Also see: Business penalties, Unpaid business taxes Why you received IRS Letter 5042 You received income through a credit card merchant account and\/or through other third-party network transactions. You filed a tax return […]<\/p>\n","protected":false},"author":605,"featured_media":17032,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[25,51],"tags":[],"class_list":["post-30769","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-irs","category-audits-and-tax-notices"],"acf":[],"yoast_head":"IRS Letter 5042 - Proposed Tax Adjustment | H&R Block<\/title>\n<meta name=\"description\" content=\"Learn more about IRS Letter 5042 and how to handle an inquiry of your business' income with help from the tax experts at H&R Block.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.hrblock.com\/tax-center\/irs\/audits-and-tax-notices\/irs-letter-5042-proposed-tax-adjustment\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"IRS Letter 5042 - 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