I got a CP05 Letter from the IRS. What now?

January 07, 2021 by Glynis Miller, CPA, MST
Tax Refund written on notepad

The IRS CP05 letter is a notification the IRS has placed a hold on the refund until they can verify one or more items reported on the tax return. This notification lets you know the tax refund you expected to receive in a few weeks may take more time to arrive. Or, if you did not file a return, it is a notification that a return has been filed using your personal information. If you did not file a return, the letter instructs you to complete and sign Form 14039 Identity Theft Affidavit. If you did file a return, before you panic, keep in mind that a review of your return at this point does not necessarily mean there is something wrong. This review is not an audit or inquiry, but frequently just a way to review your tax return information against other third-party tax reporting records.

Generally, no immediate action is required upon the receipt of a CP05. Instead, the IRS has provided a date in which they believe the review will be complete in the letter. The date is usually found in the section of the letter identified as “Next Steps.” If the IRS can verify the information in your return, the refund is simply released. If the IRS determines that the refund amount is incorrect, you could receive the adjusted refund amount; when the IRS makes an adjustment, another letter is issued to explain what adjustment(s) they made to your refund.
 

What if the IRS cannot verify the tax return?


When the IRS cannot verify the return, a follow-up letter is generally sent with a request for additional information. Due to the request for additional information, the IRS review of your tax return generally results in further delaying the receipt of your tax refund. The IRS may request information on anything from your filing status and dependents, the income you reported, claims for tax credits, withholding claimed on Social Security benefits, household help claimed, or the Schedule C income and expenses reported on your tax return. While any of these items can be under review, it is important to note that the CP05 is somewhat of a form letter. What this means is that just because all of these items may appear in the section noted as “We’ve received your 20XX tax return, and are reviewing it to verify,” the item may not actually be in your return or the actual issue under review.

As noted, most CP05 letters will not require immediate action on your part. Generally, the IRS does their review within the timeframe noted, and the refund is released. However, if you have received a CP05 and the IRS has not completed the review in the time noted, you may need to take some form of action.
 

What should you do? You can contact us here at TaxAudit.


If the IRS review is not completed by the date noted (no new letter is issued) or a new letter has been issued, contact TaxAudit's Customer Service at 800-922-8348 to utilize your TaxAudit membership. You will need to provide a copy of your CP05 and your tax return. If it is determined that further assistance is needed, more of your supporting tax documents may be necessary to complete a review of your tax return. If we find any problems with your tax return, we will report back to you, not the IRS, what we have found and discuss possible solutions and outcomes.

We look forward to assisting you. 

Tags: CP05, refund

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Glynis Miller, CPA, MST
Tax Content Developer

 

Glynis began her career with TaxAudit in February 2006 as a Seasonal Tax Return Reviewer. In December of 2008, she joined the permanent staff as an Audit Representative. Glynis has been an instructor for both continuing education tax classes and various staff training classes since 2009. Glynis holds a Bachelor of Science Degree in Accounting and a Master’s Degree in Taxation. Prior to joining TaxAudit, Glynis worked in private and public sectors of accounting. She has worked at regional accounting firms preparing tax returns, financial statements, and audit services. Her professional career has spanned over a wide variety of industries from advertising, construction, commercial real estate, farming, manufacturing and more. In 2017, Glynis joined the Learning and Development Department as a Tax Content Developer. She is providing a wealth of accounting and tax knowledge, writing skills, current job awareness, and a very cross-functional skillset to the team. 


 

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