VALID › Notice Library › CP538 notice
In the IRS’s own words · not reviewed by VALID
CP538 notice explained, in the IRS’s own words
This is the second notice telling you we haven’t received payment for taxes owed on your Form 1040, U.S. Individual Income Tax Return, with interest or dividend income. If we don’t hear from you by the date on your notice, we’ll begin (or continue) backup withholding (BWH).
Read the full CP538 page on irs.gov ↗
What this notice is about
This is the second notice telling you we haven’t received payment for taxes owed on your Form 1040, U.S. Individual Income Tax Return, with interest or dividend income. If we don’t hear from you by the date on your notice, we’ll begin (or continue) backup withholding (BWH).
What you need to do
- Review your filed Form 1040 for underreported interest or dividend income.
- File Form 1040-X, Amended U.S. Individual Income Tax Return, for any underreported interest or dividend income.
- Pay all taxes owed on your interest or dividend income from Form 1040. Use your online account to view your balance and more.
You may want to
- Read about BWH.
- Review Publication 1335, Underreporter Backup Withholding Questions and Answers PDF.
- View your payoff amount, payment history, or order transcripts using the Online account tool.
What is BWH?
This is when we instruct the payers of certain types of income (most commonly interest and dividends) to withhold a percentage of tax from future payments.
What is the BWH rate?
The current rate is 28% and can increase or decrease with the tax laws.
How long will the payers continue BWH?
The payers should continue until we tell them to stop or until you show them written certification from us that you’re not subject to BWH anymore.
Tips for next year
- File your tax return on time
- Report all interest and dividend income
- Pay all taxes due
What to do next
- Write down the date on the letter today.
- Look the number up on irs.gov yourself. Don’t trust a link or phone number from anyone else.
- If it says you owe money or proposes changes to your return, take it to a licensed CPA, EA or tax attorney before that date.
Not advice. Not a filing. Verify with a licensed professional. Rules change by year and facts.