<– Guide to IRS Demand Letters

The Internal Revenue Service (IRS) communicates primarily through the U.S. Mail. Every letter requires action. Some only require a careful read-through, as it’s only to give you information. Others require a response. If you received an adjusted refund letter from the IRS, it’s important to understand what it means. It may also be important to know how to respond if you disagree with the notice.

Adjusted refund letters, also known as CP-12 Notices, notify taxpayers that the IRS has changed the amount of the refund they’re due. This is generally due to a discrepancy in your tax return.

Inconsistencies happen for several reasons, including calculation mistakes or missing forms. “Your notice or letter will explain the reason for the contact,” says the IRS, “and give you instructions on how to handle the issue.” The CP-12 letter only requires a response if you disagree with it.

It’s important to note that receiving one of these letters does not necessarily mean that you did anything wrong. “Estimated tax payments are a common culprit in divergent refund amounts,” says Bankrate. For example, “the amount of tax on the return is calculated correctly, but the filer and IRS come up with a difference in the amount of tax paid.

Regardless, it is important to take the notice seriously and take the necessary steps to address the issue. Furthermore, the IRS recommends filing future tax returns electronically. If you decide to hire a tax professional for help, make sure they have electronic filing capabilities.

Understanding the IRS Adjusted Refund Letter

Information Section

The notice number (CP-12) appears that the top of the letter. You can also find the tax year the letter refers to, the date of the notice, and your Social Security number. If it doesn’t have these things, it may be a scam. Look carefully.

Summary Section

This is where you’ll find the reason why the IRS sent the adjusted refund letter. It also notes the calculation and the new refund amount.

Response Section

You don’t need to fill out this part of the form if you agree with the IRS’s proposed changes.

Explanation Section

This section goes over the information in the summary section in more detail.

Evaluate your tax situation

By evaluating your tax situation, you can identify areas where you may be able to reduce your tax burden and make informed decisions about your financial future.

0 – $9,999 $10,000-$24,999 $25,000-$49,999 $50,000+

Evaluate

What to Do When You Receive an Adjusted Refund Letter

Many taxpayers become concerned when they receive a letter from the IRS. These letters don’t always contain bad news. But they do generally contain a deadline for any action you may want to take. For that reason, it’s best to open the letter immediately.

Review the letter carefully. Make sure you understand the reason for the adjustment and the new refund amount. Check your tax return for errors. Compare the information in the letter to the information on your return.

Do not assume the IRS is correct. The agents are human beings. They make mistakes sometimes. There may also be a simple misunderstanding. Always keep copies of your tax returns for your future reference.

If you agree with the notice…

If you agree with the IRS’s proposed changes, then you don’t need to respond. If you don’t owe any other debts it needs to collect, then it will process the new refund amount. “You should receive a refund check in 4-6 weeks,” it says.

If the IRS is requesting additional information, gather the necessary documents and send them in as soon as possible.

If you don’t agree with the notice…

If you don’t agree with the IRS’s proposed changes, act immediately. You have 60 days to respond to the adjusted refund letter. The clock starts ticking on the day the IRS generated the letter, not the day you received it. It can take time to gather the information you need for your case. It can also take time to craft a response to the IRS.

The IRS will consider all the information you include in your written and/or verbal response. It’s important to be mindful of the information you include in your answer. It’s easy to unwittingly give the IRS the wrong idea about your case.

It’s not hard to get the IRS to accept changes that reduce the refund you requested. However, if it doesn’t receive “information that supports your original return, [they] may forward your case for audit.”

Experts suggest taxpayers consult with a reputable tax professional for advice or service if they don’t agree with the IRS’s proposed changes. A timely response “preserves your appeal rights if you don’t agree” and “minimizes additional interest and penalty charges” according to the IRS.

Why it’s Important to Get Help

Dealing with an adjusted refund letter and the IRS can be confusing and overwhelming, especially for a busy taxpayer. A tax professional can help ensure that you understand the letter and respond to it correctly. This is critical in helping you avoid additional penalties or interest. They can also help you correct errors on your return and gather any missing documents.

Why Advanced Tax Team?

At Advanced Tax Team, we’ve helped taxpayers overcome countless CP-12 Notices they didn’t agree with. We have the knowledge and experience you need to achieve your best possible results.

We are an accredited business with an A rating at the Better Business Bureau, and we have no complaints. The Advanced Tax Team prides itself on the efficient, friendly, and quality service we provide to our clients. After all, it’s our goal to earn our new clients for life.

For that reason, we offer a free and thorough consultation with a qualified tax professional. We’ll start by getting to know a little bit about you and the details of your case. Then we’ll discuss your options with you. There’s no obligation to hire our firm after your free consultation.

Should you decide to engage our services, we’ll send you a written document that includes what we discuss during your free consultation. Additionally, it’ll include the flat rate we discuss. We have no added fees for the same service and no hidden charges.

If you’re unsure how to respond to an adjusted refund letter or if you need help correcting errors on your tax return, seek the advice of a tax professional.

Because some cases take longer to resolve than others, we encourage you to contact us as soon as possible. It’s important to act quickly to avoid any further issues. Contact us today at 877.959.0975. We’re ready and happy to help.

Resources

1. Professionally reviewed by Robin T Young. “Tax Audits.” Tax Relief Professional, 8 Dec. 2022, https://taxreliefprofessional.com/tax-audits.
2. Bell, Kay. “What to Do If Your Tax Refund Is Wrong.” Bankrate, https://www.bankrate.com/finance/taxes/what-if-tax-refund-is-wrong-1/.
3. “Understanding Your IRS Notice or Letter.” Internal Revenue Service, https://www.irs.gov/individuals/understanding-your-irs-notice-or-letter.
4. “Understanding Your IRS Notice or Letter.” Internal Revenue Service, https://www.irs.gov/individuals/understanding-your-irs-notice-or-letter.