Notice CP12: What This IRS Notice Means, How to Respond to It, and Why You Might Have Gotten a CP12 in the First Place

The IRS version of the 404 Error “Data Not Found (on Your Tax Returns)”

Why did the IRS send you a CP12 Notice? It’s simple.

The CP12 Notice primarily addresses changes made to your e-filed tax return, and it provides information on the adjustments made, your updated income tax balance, and any additional refunds issued. 

Differences Between CP12A and CP12B Explained

If you received the IRS Notice CP12, you may also receive CP12A and CP12B notices at a later date. These notices are related to the original Notice CP12 and contain additional information that taxpayers should be aware of.

CP12A provides information about any additional tax refund owed to the taxpayer. This could be due to changes in the tax return calculations or corrections made by the IRS that were not reflected in the original refund check. For example, if a taxpayer claimed a deduction or credit on their tax return that the IRS initially missed, then CP12A would notify them of the additional refund they are entitled to. If the IRS thinks they owe you more back, you’ll get the next tax refund in about 4-6 weeks.

On the other hand, CP12B notifies taxpayers of any reductions made to their original refund check. This could be due to various reasons such as outstanding debts owed to the government or changes made by the IRS to the taxpayer’s original return that reduced the refund amount. For instance, if the IRS discovered that you did not qualify for a certain deduction or credit you claimed, then CP12B tells you that you now have a new federal debt because of the reduction made to your original refund check. You can send a reversal request to tell the IRS that the original return was right, but you’ll need to substantiate it and you only have two months (or 60 days) to do so.

It is important to note that the IRS issues CP12A and CP12B separately from the original CP12 Notice for a reason. The IRS processes refund adjustments in batches, and the timing of these adjustments can vary for each taxpayer.

CP12A and CP12B notices are sent out separately to ensure that taxpayers are informed of any changes to their refund check as soon as possible.

CP2000 Notice

The CP2000 Notice is a type of tax notice sent by the IRS to taxpayers to inform them of discrepancies found between the income, deductions, credits, and payments reported on their e-filed tax return and those reported by third-party sources, such as employers and financial institutions. The purpose of the CP2000 Notice is to give taxpayers the opportunity to review the information and respond to any proposed tax adjustments.

In contrast to the Notice CP12, which specifically addresses changes made to your tax refund amount, the CP2000 Notice focuses on the entire tax return and potential adjustments that may be necessary. There are several reasons why one might receive a CP2000 Notice.

Some common reasons include discrepancies in reported income or deductions, claiming credits for which one is not eligible, failing to report taxable income such as capital gains, or making math errors when calculating estimated tax payments.

Reasons for Receiving a CP12 Notice

The CP12 notice often comes as a pleasant surprise for taxpayers who may be unaware of mistakes made in their tax filing, but it may also prompt concerns regarding the reasons behind the changes made.

Error in Tax Return Calculation

If you receive a Notice CP12 from the IRS, it means that there is an error in the calculation of your tax return. It is important to understand that the IRS uses the information provided on your tax return to calculate your taxes owed or tax refund due. However, errors can occur in this process, resulting in discrepancies in the tax return calculations.

To address the error in tax return calculation, you need to review the tax return calculations included in the notice carefully. It is crucial to compare them with your original tax return to identify any errors. If you find an error, the IRS provides instructions on how to correct it.

To correct the error in your tax return, you can file an amended tax return using Form 1040-X. You must attach a copy of the CP12 notice with the amended return and mail it to the IRS via certified mail with return receipt. The amended return must be filed within the deadline specified in the Notice CP12.

It is highly recommended to consult a professional tax preparer to ensure that all calculations are accurate and the error is addressed correctly. Tax return correction can be a complex process, and it is advisable to seek professional help to avoid any further complications.

In some cases, tax return rejections can occur even after correction, which may require you to appeal the decision by filing Form 5564, Notice of Deficiency – Waiver. That said, you do have appeal rights. Appealing a tax return decision can be a lengthy and complicated process, and it is advisable to seek professional help. 

Claim for Refund Rejected

Tax return rejections can be stressful. A claim for tax refund is a formal request made by a taxpayer to the IRS to return money that has been overpaid in taxes. However, sometimes the IRS may reject this claim due to errors or miscalculations in the original tax return or if the taxpayer owes additional taxes to the government. 

If your claim for refund is rejected, it is important to carefully review the reasons provided in the notice. Often, the CP12 notice includes instructions on what steps to take to address the rejection, including submitting any necessary forms or documents to support your claim.

To successfully appeal a rejected claim for refund, it is essential to provide detailed information regarding the original e-filed tax return, including income sources and tax payments. This will enable the IRS to better understand the nature of the error and how it can be corrected.

In addition to providing supporting documentation, it is advisable to seek professional help to ensure that the appeal process is handled correctly. Tax laws can be complex. Work with a tax preparer or accountant to avoid further complications or errors in the appeal process.

If you owe additional taxes to the government, it is important to address these payments promptly. Failure to do so can result in additional penalties and interest charges. If this happens, you have options. You can engage the Taxpayer Advocate Service, an independent organization in the IRS with the job of protecting your rights and helping you through outstanding tax debts. You may get a payment plan, a settlement, or any of a dozen options that work best for your financial situation.

Additional Refund Owed to the IRS

If you receive a Notice CP12 that states you are owed an additional refund, there are several steps you should take to ensure you receive the money you are owed.

First, it’s essential to confirm that it’s legitimate. Check the date and make sure it matches the time frame of the tax return in question. Next, verify that the refund amount listed matches the amount you expected to receive. If there are any discrepancies, contact the IRS immediately for further clarification.

The CP12 will explain how the additional refund was calculated, including any interest that has accrued on the original refund amount. You can expect to receive the refund check within 4-6 weeks after the notice’s date. The IRS typically sends refund checks to the address on your original tax return unless you provide updated information.

It’s essential to keep in mind that the IRS may need to verify your identity before issuing the additional refund. If this is the case, the Notice CP12 will include specific instructions on the verification process.

In some cases, the IRS may identify an error in your original tax return that resulted in the additional refund. If this is the case and you agree with the error, you do not need to take further action. However, if you believe that there is an error, it is crucial to contact the IRS as soon as possible to address the issue.

Understanding Contents of the IRS Notice CP12

Understanding the contents of an IRS notice is crucial for taxpayers who receive one. Knowing what to look for and what each section means can help individuals take the necessary steps to address any issues and prevent future problems with the IRS. 

Notice Deadlines for Responding to the CP12

If you receive a Notice CP12, it’s important to respond promptly within the given deadlines to avoid additional penalties and interests. The Notice CP12 typically notifies taxpayers of a correction the IRS has made to their tax return, resulting in either an additional refund or a reduction in the original refund amount.

The IRS provides a deadline of 30 days from the notice date for taxpayers to respond in writing to the Notice CP12. If you live outside the United States, you will have slightly more time, with a deadline of 60 days to respond. Failing to adhere to the given deadline can result in further collection efforts, penalties, and interests from the IRS.

With this notice, you have a clear deadline to respond, and failure to respond within the given timeframe can result in additional penalties and interests. If you have any doubts or questions, it’s advisable to contact the IRS immediately. Remember, it always pays to stay ahead of the taxman!

Information Requested by the IRS

Upon receiving a Notice CP12, taxpayers may be required to provide additional information related to previous tax returns, income tax returns, tax return corrections, and respective tax return errors that led to the issuance of the Notice CP12. This could include details about any discrepancies between tax returns filed in the current year compared to previous years, information about tax payments made, decision-making processes regarding making payments, and any incorrect stimulus payments made.

Taxpayers who receive a Notice CP12 should review their tax return and check for any errors made while filing their taxes. If there are any discrepancies between their tax return filings for the current year and previous years, the IRS may ask for additional information to help reconcile the differences. It is important to provide all requested information in a timely manner to avoid further penalties and interest.

In some cases, the IRS may require certain documents to ensure the accuracy of the CP12 notice. These documents could include any previous tax returns, income tax returns, tax return corrections, or other relevant records. It is crucial to comply with these requests and provide all necessary information as quickly as possible to avoid additional fees or interest.

Additionally, if a taxpayer received an incorrect stimulus payment, there may be further requests for information related to the payment. This could include a request for documentation of the correct payment amount, receipts of any previous payments made, and information regarding any decision-making processes that led to incorrect stimulus payments being received. Providing all relevant documentation and information in a timely manner can help avoid any additional penalties or interest charged by the IRS.

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