There is a wide-spread problem across numerous universities in regard to 2014 non-resident alien tax returns whereby the IRS is not recognizing the federal taxes withheld and reported on Form 1040NR or 1040NR-EZ,U.S. Nonresident Alien Income Tax Return. Northwestern non-resident alien students may have received Notice CP22A, CP21C, or Letter 5532C from the IRS. These notices state the IRS is disagreeing with your 2014 tax return.
The following are a list of frequently asked questions (“FAQs”) regarding correspondence from the Internal Revenue Service (“IRS”) received by some of our students in relation to their Form 1040NR or 1040NR-EZ with attached Form(s) 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding.
Background Information – IRS Notices:
(1)Why did I receive a notice(s) (CP21C, CP22A or 5532C) from the IRS regarding my 2014 Form 1040NR or Form 1040NR-EZ?
In response to increasing identity theft schemes (and other issues), the IRS is reviewing Forms 1040NR and 1040NR-EZ, which claimed a credit for tax withholding reported on Form 1042-S. During the review process, the IRS delays the release of a refund associated with withheld taxes reported on Form 1042-S. The delay is up to 168 days. This gives the IRS additional time to compare the information reported on your copy of Form 1042-S with the Form 1042-S received by the IRS. The review is to determine if all the information matches the Form 1042-S filed with the IRS. Additionally, the IRS confirms that the taxes reported as withheld were actually deposited with the IRS. As part of this review process, you may have received a notice from the IRS denying a credit or refund claimed on your Form 1040NR or 1040NR-EZ, of the withheld taxes reported on the Form 1042-S issued to you by Northwestern or any other payor. The notice is to inform you that the IRS was unable to match either specific information or payment amounts reported on your Form 1042-S.
(2)What is a Notice CP21C?
A CP21C will notify you of a change to your 2014 Form 1040NR or 1040NR-EZ. On the first page of the notice, it will have the following information (in addition to your identifying information):
●The amount of the increase in tax
The notice does not describe that you have a balance due. The notice is informational only and will state that you do not need to respond if you agree with increase in tax. The second page of the notice will provide a telephone number to call and an address to respond in writing if you do not agree with the changes to your account.
(3)What is a Notice CP22A?
A CP22A will notify you of a change to your 2014 Form 1040NR or 1040NR-EZ. On the first page of the notice, it will have the following information:
●Your IRS account balance (credit or amount due) before the IRS adjustment
●The decrease in the tax withholding credit
●The amount of a failure-to-pay penalty, if any
●The amount of interest, if any
●The amount due and the due date
The second page of the notice will provide a telephone number to call and an address to respond in writing if you do not agree with the changes.
(4)What is a Correspondence Letter 5532C?
The Letter 5532C will notify you that the IRS reduced or eliminated the withheld tax reported on Form 1042-S and claimed on Form 1040NR or 1040NR-EZ. The letter will advise you that:
●The information reported by Northwestern University or another payor on Form 1042-S does not match the information reported to the IRS.
●You should contact Northwestern University or another payor to determine the reason for the mismatch.
●The IRS will send further correspondence with the change to the refund or amount you owe that you reported on your return.
The notice may also provide a telephone number to call and/or an address to respond to in writing if you do not agree with the changes.
If you have not taken any action:
(5)What should I do if I receive IRS correspondence regarding my 2014 Form 1040NR?
You should immediately contact the IRS by telephone or in writing to respond to the notice before the due date.
Our recommendation is that you call the IRS at the number listed on the notice (1-800-829-8374). When you call this number, please choose prompt number five (5), "detailed review of account information." Then choose either prompt one (1) or two (2) based on whether you filed a joint personal income tax return or did not file a joint return. When you speak with a representative, tell the IRS the following:
(A)You disagree with the denial of a credit or refund of the taxes withheld and reported on Forms 1040-NR or 1040NR-EZ
(B)You need additional time to understand the cause of the notice
(C)Your employer has verified the federal tax withheld on your 1042-S
(D)You request a “hold” or “freeze” on your account for at least six (6) to eight (8) weeks
If you call the IRS, you may experience long wait times to speak with a representative but will receive immediate confirmation whether the hold or freeze was granted. A hold should forestall further collection activity (e.g., additional notices) until the hold expires. However, it is not uncommon to receive a notice following the collection freeze. This occurs because the notices are computer-generated and may have been scheduled to be delivered before the collection freeze was established.
Consider calling the IRS earlier or later in the day; the IRS call center is staffed between 7am and 7pm. We recommend that you keep a record of the date, time, and badge number of the agent you speak with.
If you write to the IRS:
- Prepare a written response. Your response will notify the IRS that you DISAGREE with the proposed adjustment eliminating the amount of tax withholding reported to you on Form 1042-S. A sample response letter is available here.Be sure to sign your letter.
- Attach the following items:
oA copy of the IRS Notice or IRS Correspondence Letter that you received;
oA copy of the 2014 Form 1042-S, Copy C;
oA copy of the Form 1040NR or 1040NR-EZ that you filed (it MUST include your signature and date);
oA copy of the verification of your 1042 federal tax withheld.
- Make a copy of all the documents and retain them for your records.
- Send your response via the United States Postal Service using “certified mail return receipt requested.” This can be done through the post office. Your response letter must be sent to the address as shown on the IRS notice you received. If you need assistance mailing your response, please contact Payroll for assistance.
(6)Can Northwestern University contact the IRS on my behalf?
The IRS has strict rules limiting who may access your personal tax information. Northwestern University is not authorized to speak with the IRS on your behalf. Northwestern University is, however, committed to providing support to its studentswho have received IRS notices related to Forms 1042-S.
(7)Can Northwestern assist me in my response to the IRS?
Yes. If you would like assistance in responding to the IRS notification(s), Human Resources will have representatives available from the Payroll Division within the Office of Human Resources to prepare correspondence (as described in FAQ 5) from you to the IRS. You can make an appointment by calling the Payroll Office in Evanston or Chicago (1-7362) or . Both campuses will have individuals able to help prepare a response.
For your meeting with the Payroll representative, please be sure to bring the following items with you:
- The correspondence the IRS sent you: copy of IRS notice CP22A, CP21C, and/or IRS Letter 5532C
- The tax documents you filed with the IRS for the year 2014:Copy of signed 1040NR or 1040NR-EZ
Payment to IRS:
(8) Should I pay the balance due listed on the IRS notice?
We would recommend that you not pay the balance listed on the IRS notice. By requesting a hold or freeze on the account, as in FAQ 5, the IRS will generally not send any further IRS correspondence related to this matter for the duration of the hold. Keep in mind, there may be notices that were automatically generated and in the mail to you prior to putting a hold on your account. Upon receipt of the notice(s) and provided that your account is on hold, there is no immediate action you need to take.
(9) How long will my account be on hold or frozen? What happens after it is no longer on hold or frozen?
If you call the IRS and request and/or receive a hold, ask the representative to confirm the date that the hold will expire. Make sure to note the badge number, date, and time of your call. The IRS will typically grant a six to eight week hold. We recommend that you call or write the IRS again prior to the expiration of the hold to extend it. If you do not extend the hold, the IRS will send you another notice requesting payment of any balance due. It is beneficial to you to prevent any further IRS notices or collection activity by proactively contacting the IRS to extend the hold.
(10) What happens if I receive details from the IRS stating my hold or freeze was not approved?
Call the IRS and speak with another IRS representative. If the IRS does not grant a hold or freeze on your account, write a letter to the IRS to notify it that you do not agree with the adjustments made to your Form 1040NR or 1040NR-EZ. A template letter for your use is provided here.
(11) How long will it take to have the matter resolved so I can receive credit for the taxes withheld and/or a refund?
It is our understanding that thousands of college and university students throughout the U.S. have received similar notices. Northwestern University is working diligently with the IRS, the National Association of College and University Business Officers (NACUBO), our tax filing vendor, and tax adviser to investigate the cause of the IRS notices. The Taxpayer Advocate Service (TAS) is also aware of the issue affecting college and university students and has assigned a project team to work with the IRS. It will likely take several months for the IRS to work with Northwestern University and our peer institutions to address this matter.
(12) Will the IRS continue to send IRS notices if I do not pay the balance due?
It is important to maintain communication with the IRS until this matter is resolved or until the balance is paid, if required. Otherwise, the IRS will put your account in "collections" status. The IRS will send additional notices every 30-45 days to an individual taxpayer who has a balance due. The notices you receive may vary depending upon your individual circumstances, but you may receive 3 – 5 IRS notices if you do not have a hold or freeze on collection activity. Two tools that the IRS may use to collect delinquent taxes for individuals whose accounts are in collections status and whose delinquent taxes have not been resolved are a tax lien or levy. A federal tax lien is a legal claim to your property. A levy is an administrative means for the IRS to seize assets such as wages, bank accounts, vehicles, or real estate to satisfy delinquent taxes.
In general, the IRS has the right to file a Notice of Federal Tax Lien with public authorities if a taxpayer fails to pay a balance due on an initial demand letter within 10 days. A revenue officer is not required to file a Notice of Federal Tax Lien, however, where the balance due does not exceed $10,000. It is not a guarantee as there are instances where the IRS will file a Notice if the taxes owed are less than $10,000, but the IRS will undergo a pre-filing determination process before filing a Notice of Federal Tax Lien. The IRS will send Letter 3172 to notify you if the IRS filed a Notice of Federal Tax Lien. Your credit score should not be affected prior to a Notice of Federal Tax Lien filing by the IRS.
With respect to IRS levies, the IRS may send Notice CP504 to inform you of its intent to pursue further collection activity. The IRS will send the last notice, a "Final Notice of Intent to Levy and Your Right to a Hearing" (Letter L-1058, LT11, CP90, etc.), accompanied with an explanation of appeal rights, prior to pursuing levy action. Note that the IRS may file a Notice of Federal Tax Lien prior to sending a Final Notice of Intent to Levy.
Prior to the IRS imposing a federal tax lien or levy, you will have the opportunity to pursue resolutions options with the IRS if you are diligent to contact the IRS. For example, a hold or freeze on collection activity will prevent additional IRS notices from being sent to you and the filing of a lien or levy, as previously described, for the duration of the hold.
2015 Tax filing:
(13) Will I have the same issues after filing my 2015 Form 1040NR?
The IRS matching procedure described in FAQ 1 is a permanent program. If you claim on your 2015 personal income tax return, Form 1040NR or 1040NR-EZ, a credit for taxes withheld and reported on your 2015 Form 1042-S, the IRS will place an automatic freeze on your account before releasing a refund. If any discrepancies are identified during the course of the IRS review, you may receive a notice.
(14) What happens if I file my taxes and they keep my 2015 refund?
If the IRS does not identify any discrepancies as part of its matching program, it will release your refund at the end of the 168 day freeze or earlier upon the completion of the IRS review. The IRS may notify you during the course of its review that it needs additional time (IRS Letter 3064C), which will extend the 168 day freeze. If the IRS does identify a discrepancy or otherwise determines that you owe taxes, you will receive one of the notices described in FAQs 2 – 4. You should promptly respond to any IRS notice.
(15) Should I request an extension to file my 2015 tax return?
The situation resulting in IRS notices related to your 2014 Form 1040NR is not certain to be resolved prior to the due date of the 2015 income tax return. Each person’s income tax situation is unique to that person. As a result, it may be advisable to extend your 2015 income tax return to allow additional time for the IRS to present a solution to the current situation. The IRS automatically grants a six-month extension to file to all taxpayers that request an extension on or before the due date for filing their return. A nonresident alien who has U.S. taxable income and must file a Form 1040NR, but did not receive wages (i.e. Form W-2) as an employee, must do so on or before June 15, 2016. If you received wages, the Form 1040NR is due on or before April 18, 2016. If you determine that requesting an automatic six-month extension is advisable, you do so by filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.
If you owe taxes, you will need to make your tax deposit by the June 15, 2016 original deadline, even though you have requested an extension. To determine if you owe taxes, complete your tax return to estimate your obligation, but do not file it. The deposit instructions are included on Form 4868.
Please refer to Page 4 of Form 4868 for specific mailing instructions.
If you choose to request an extension please use a mailing service that provides proof of mailing.Typically if you use the US Postal Service this is accomplished by requesting “Return Receipt” and “Certified Mail” processing. These mail receipts should be retained and can be used to prove you made a timely request in the event the IRS fails to process your extension.
Contacts/Resources
For more information, please contact the Payroll Division within the Office of Human Resources at or call (847)491-7362. You may also visit The Graduate School’s website for additional information and updates.