CP05A Notice from IRS: Verification of Income, Withholding, and Tax Credits

CP05A Notice from IRS: Verification of Income, Withholding, and Tax Credits

For many, the sight of an IRS letter or notice in the mailbox is cause for immediate panic. The last thing anyone wants is a notice from the Internal Revenue Service. While a CP05A notice might not indicate anything serious, it is essential to know why the IRS is reviewing your income, withholding, and tax credits from your tax return.

Let’s dive more into what this IRS notice means and what you should do if you receive one.

When Does the IRS Send a CP05A Notice?

A CP05A notice is mailed to taxpayers to advise them that the IRS has delayed their refund, This is until the accuracy of their income, tax withholding, and credits is checked and verified. Keep in mind that receiving a CP05A does not automatically mean there’s a mistake or accuracy-related issue with your taxes.

Why Is the IRS Reviewing My Tax Return?

Receiving an IRS CP05A notice does not always indicate carelessness or deceit on your part. Income, withholding, and credits on your tax return may have been chosen randomly by the IRS to review and verify. In some cases, the IRS may ask you to provide additional financial information before they issue a refund.

If asked, you’ll need to send the IRS copies of requested financial documents, so they can confirm your income, withholding, and tax credits are accurate. Documents typically include paystubs, employment verification, and/or copies of paychecks.

Note that you have 30 days from the date on your CP05A notice to respond to the IRS by mail or fax. Keep copies of all financial documents you submit to the Internal Revenue Service.

What Do I Need to Do If I Receive a CP05A Notice?

When you receive a CP05A notice, take the following actions:

  • Read the verification notice carefully to make sure you understand why the IRS sent it, what the IRS needs to verify, and how much time you have to respond.
  • As soon as you receive the notification and before submitting requested information, you can consult an expert tax attorney (Schedule a free call if you need help).
  • Provide your attorney with a copy of your tax return and supporting financial documents you have that may be relevant to the IRS’s request.

How Long Will a Tax Return Review and CP05A Notice Delay My Refund?

Within sixty days after you receive an initial CP05 notice, the IRS sends the CP05A letter. This letter will contain detailed instructions on what you must send to the IRS. When you receive the follow-up letter, you must send the requested information within 30 days.

After analyzing your submitted documents, the IRS may suggest a change to your tax return. Your signature is required to finalize this tax return adjustment.

If you disagree with the IRS’s decision to revise your tax return, you can request a consultation with an IRS examiner or submit an appeal.

If you and the IRS can agree within 90 days, then you won’t need to do anything else. However, if you and the IRS cannot reach an agreement within 90 days, they may send you a Notice of Deficiency in the mail.

If the revised amount is acceptable to you, you can sign the form, and the IRS will issue your adjusted refund in six to eight weeks. If you owe the IRS money after the revision, you have two options: pay it now or set up an IRS payment plan. IRS installment agreements and other tax relief for economic hardships, like an Offer in Compromise, are good options when you can’t pay your full tax debt.

In summary, your CP05A notice from the IRS simply informs you that the processing of your return has been delayed while they verify some of the information you provided. To avoid any confusion or penalties, respond within the timeframe specified in the letter.

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