What the notice means
The IRS CP518 page is blunt: “This is your final reminder; we still don’t have a record that you filed your prior year tax returns.” The notice asks for one of three things: file the return with a completed Form 15103 explaining why it is late, send Form 15103 to explain that the return was already filed, or send Form 15103 to explain why no return is required. If nothing comes back, the page warns, “We may determine your tax for you.”
A CP518 is not a bill and does not assess anything. It is the second and last return delinquency (RD) notice for an individual (the business version is the BMF CP518 that follows a CP259). The authority behind the warning is IRC 6020(b): when a person fails to file, the IRS “shall make such return from his own knowledge and from such information as he can obtain through testimony or otherwise,” and the result is “prima facie good and sufficient for all legal purposes.”
Why the client got it
The CP518 generates systemically. IRM 5.19.2.3 explains that the IMF case creation process identifies non-filers for whom “potential income/data is available and reported to the IRS via ‘Information Return Masterfile’ (IRMF) that meets certain case selection criteria,” and stop-filers who filed one year but not the next. Selected modules get a CP59 first. Then: “Generally a CP 518 will be issued if a return does not post or the open RD is not closed within 8 weeks of the CP 59.”
So a CP518 usually means one of three things happened after the CP59: nothing was sent; a return was mailed but has not posted (the IRS page says a return filed in the last eight weeks needs no further action); or a Form 15103 response was sent but did not close the module. Pull the account transcript before assuming the client ignored the first notice. If the CP59 was returned undeliverable with a new address, the IRS reissues it with a CP515 and the clock restarts (IRM 5.19.2.3).
Not every delinquent module gets a CP518. IRM 5.19.2.3 notes that primary code B cases “receive two notices (CP 59 & CP 516) and will remain in notice status 02,” and a new module can skip the CP518 and jump to the status of an older module already in TDI status 03.
Deadlines and what happens if they pass
| Event | Timing per IRM 5.19.2 | Effect |
|---|---|---|
| CP59 issued | Module enters notice status 02 | First request for the return |
| CP518 issued | 8 cycles after the CP59 if not resolved | Final notice; substitute for return warning |
| TDI status 03 | 6 cycles after the CP518 (14 cycles after the CP59) | Case available to ACS or ASFR |
| ASFR or ACS | After status 03 | Automated 30-day letter (CP2566) or ACS contact (LT16) |
IRM 5.19.2.6.1.1 states the arithmetic directly: for non-PC-B modules “a final RD notice (CP 518) is issued 8 cycles later and 6 cycles after that, (14 cycles after the first RD notice) the module goes to TDI Status 03.” IRM 5.19.2.3 adds: “The case proceeds to TDI ST03 if the case is not closed within 6 weeks of the CP 518,” and “Unresolved IMF RD cases may be considered for ASFR or ACS processing.”
The notice itself carries no appeal right and no statutory deadline. The real clocks are the refund statute (the IRS page notes a refund can be delayed, and IRC 6511 limits how long a refund can be claimed) and the failure to file and failure to pay penalties, which run from the original due date whether or not the IRS ever prepares a return.
A CSCO employee who receives a promise to file is told to “establish a deadline for taxpayer to file, with the initial deadline of 15 days” and to set a follow-up 15 days beyond that (IRM 5.19.2.8.4). A reasonable explanation for needing more time (for example, waiting for IRS wage and income data) can extend the deadline without managerial approval. Ask for the extension in writing and keep the record.
How to respond
- Confirm what the IRS has. Pull the account transcript (does a TC 150 show?) and the wage and income transcript for the year through TDS. The information returns on file are exactly what an ASFR assessment would be built on.
- If the return was filed more than eight weeks ago, send a signed, dated copy with Form 15103 to the address or fax number on the notice. The IRS page says to make sure the name, SSN and year on the return match the notice. IRM 3.11.3.5.3.2 accepts a signature on an attached Form 15103 or CP59 in place of a signature under the jurat.
- If no return is required, complete Form 15103 and send it by mail or fax, or submit it through the client's IRS Online Account (the page says an account is required for the online option). State the reason: income below the filing threshold, decedent, filed jointly under the spouse's SSN, and so on. IRM 5.19.22.5.3 shows the IRS closes business delinquencies on oral statement; for individuals, Form 15103 is the documented route.
- If the return is due, prepare and file it. The IRS page says the two most recent prior years can be e-filed through a provider that supports prior-year returns; older years go on paper with Form 15103. Include the IP PIN if the client has one.
- Scope the other years now. IRM 5.1.11.7.1 says “Enforcement of filing requirements will normally be pursued for a six year period,” and that the taxpayer may file for all open periods. A CP518 for one year is often the first visible sign of several.
- If a balance will result, plan the payment with the filing: see installment agreements and currently not collectible status. The IRS page tells the taxpayer to file even if the balance cannot be paid.
Do not ask the IRS to prepare the return. IRM 5.19.2.6.4.5.4 tells employees who receive that request to “inform the ASFR program uses the highest tax rates with the standard deduction allowed,” that “interest and penalties will accrue from the original due date of the return until the substitute for return is processed and the account is paid in full,” and to advise that it is in the taxpayer's interest to file. (An older passage at IRM 5.19.2.6.4.3 says the program uses “the highest tax rates with no deductions allowed”; either way the ASFR computation gives no dependents, credits, itemized deductions or a joint rate schedule.)
What the IRS does next
If the return posts or Form 15103 closes the module, the delinquency ends. Otherwise the module goes to TDI status 03 and one of two things happens. Cases that meet ASFR criteria are referred to the Automated Substitute for Return program; IRM 5.19.2.6.4.3 says “Cases selected with ASFR select codes receive a CP 59 and CP 518 (or 759/618) notice and then are automatically assigned to ASFR.” ASFR then issues a 30-day proposal (CP2566) and, absent a return, a notice of deficiency (CP3219N). The same section lists modules ASFR will not take, including accounts with no IRPTR data, certain freeze codes, combo cases with a balance due module, and “The only tax year is older than six years from the current calendar year.”
Other cases go to the Automated Collection System, which typically opens with an LT16 and can be followed by a revenue officer assignment for larger or more complex accounts. For the program in full, see substitute for return and ASFR.
Related notices
- CP59: the first individual return delinquency notice.
- CP259: the business equivalent, followed by a BMF CP518.
- CP2566 and CP3219N: the ASFR proposal and notice of deficiency.
- LT16: ACS contact about unpaid tax or unfiled returns.
Questions practitioners ask
The client filed after the CP59. Why a CP518?
The CP518 generates eight cycles after the CP59 unless a return posts or the module is closed. A paper return filed late in that window may not have posted. Check the transcript; if the return was filed more than eight weeks ago, send a signed copy with Form 15103.
Does the CP518 start an appeal or Tax Court clock?
No. It is a request for a return. The first statutory clock in this sequence is the 90-day period on the CP3219N notice of deficiency if ASFR takes the case.
How long after the CP518 does something happen?
IRM 5.19.2.3 says the case proceeds to TDI status 03 if not closed within 6 weeks of the CP518. From there it can go to ACS or ASFR; the IRS does not publish how quickly a given case is picked up.
Can the representative handle the response?
Yes, with a Form 2848 covering the year. The Form 15103 route is a factual statement; a filed return still needs the client's signature (or Form 8879 for e-file).
How many years will the IRS pursue?
IRM 5.1.11.7.1 says enforcement is normally pursued for six years under Policy Statement 5-133, with managerial approval required to enforce more or fewer years. Nothing stops a client from filing older years voluntarily.