What Is IRS Form 4846 and How Should You Respond?
Understand what it means when the IRS references its internal Form 4846. This guide clarifies the process and helps you respond to the related tax inquiry.
IRS Form 4846 is an internal document used by Internal Revenue Service employees and is not a form taxpayers are expected to complete or file. A taxpayer learns of its existence only when the form number is referenced in correspondence from the IRS or mentioned by an agent. Its use signifies that an IRS employee is formally requesting a taxpayer’s income and payment data from internal databases to proceed with a case, such as an audit or collection effort.
Why the IRS Uses Form 4846
The function of Form 4846 is to allow IRS personnel to retrieve a taxpayer’s income history for a specific year from the Information Returns Master File. If a taxpayer has not filed a return, the IRS may use this process to gather third-party reported income to create a Substitute for Return (SFR) under Internal Revenue Code Section 6020. This SFR will calculate tax, interest, and penalties based on the income data retrieved, which often lacks deductions the taxpayer might be entitled to claim.
During an examination, an agent uses the information from a Form 4846 request to verify that income reported on a tax return matches what has been reported to the IRS. The data retrieved includes wage information from Form W-2 and payments documented on the Form 1099 series. In collection cases, a revenue officer uses this same data to assess a taxpayer’s financial situation and determine their ability to pay an outstanding tax liability.
Responding to an IRS Inquiry
Discovering that Form 4846 has been used in your case means the IRS is actively reviewing your tax situation, and a prompt response is necessary. Since you do not interact with the form, your focus should be on the underlying issue, whether it is an audit, a collection notice, or a proposed change to your tax liability. Ignoring the communication, such as a CP2000 notice, will lead to the IRS making an assessment and initiating collection actions.
The first step is to gather your personal copies of all income documents for the tax year in question, including all W-2s and 1099s. Compare these documents against the income figures provided in the IRS notice. If there are discrepancies, you must provide a timely response explaining the differences, supported by documentation. Preparing an accurate reply to the notice is the most direct way to resolve the issue.