The IRS sends a CP16 notice after it adjusts your tax return because it contained an error and that change results in a lower tax refund. The reason for the tax refund adjustment is that your refund should have been applied to back taxes form a prior year.
If you received an IRS notice CP16, you might have questions or concerns, or you might feel your tax refund was erroneously reduced. Do not fret — you have options. Here is more information about an IRS CP16 notice and how to respond.
What Is a CP16 Notice?
A CP16 notice is a letter sent by the IRS when it adjusts your tax return and seizes some or all of the money from your tax refund to cover unpaid taxes from a previous year.
Why Did I Receive an IRS CP16 Notice?
You received a CP16 notice because the IRS determined your tax return contained an error that resulted in your tax refund amount being higher than it should be. The tax return error was likely due to a failure to account for back taxes owed from another year.
The IRS has applied your refund to these unpaid taxes after correcting the error and adjusting your tax return.
Does My CP16 Notice Explain Why the IRS Changed My Tax Return?
Yes, your CP16 notice explains why the IRS changed your tax return, but the exact details might be scant.
If you want more specifics, such as how you came to owe back taxes from a previous year to begin with, you can call the toll-free number listed on your IRS notice CP16 to connect with a representative who can give you more information. More reading: How to get an actual human being on the phone at the IRS
Do I Owe the IRS Money If I Receive a CP16 Notice?
Receiving a CP16 notice does not necessarily mean you owe the IRS money. If your tax refund is enough to cover your back taxes, then you should not owe the IRS anything going forward. In fact, you might still receive a portion of your refund if only some of it was used to settle your unpaid taxes.
However, if your tax debt exceeds the amount you overpaid, you still owe the IRS money even after your tax refund is applied to your debt.
How Do I Get the Details of My CP16 Notice Back Taxes?
Your CP16 notice should tell you the amount of your back taxes and what years they were from. If you want more information about your unpaid taxes, you can contact the IRS at the phone number listed on your CP16 notice.
What If I Disagree with My CP16 Notice and Why the IRS Seized My Tax Refund?
If you want to dispute your CP16 notice or the reasons it was sent, you contact an IRS representative at the number listed on your CP16. The IRS representative will explain how to file a CP16 dispute in writing and what supporting documentation you will need.
What’s the Deadline to Respond to the IRS About My CP16 Notice?
If you disagree and want to dispute your CP16 notice, you must respond within 60 days. There is no need to respond to your CP16 notice if you agree, even begrudgingly, with the changes made by the IRS, though it is a good idea to update your own tax records to reflect the changes.
What Information Do I Need to Dispute My CP16 Notice?
If you file a CP16 dispute in writing within 60 days of receiving your CP16 notice, the IRS will reverse the changes — at least for now. But if you fail to provide adequate documentation to support your CP16 dispute, your case will move to audit status, and the changes will likely be reinstated.
The documentation you need includes any and all evidence that you do not owe the back taxes the IRS claims that you owe.
If I Received a CP16 Notice and My Tax Refund Was Applied to My Spouse’s Unpaid Taxes, How Do I File for Injured Spouse?
In most injured spouse cases, the other spouse’s back taxes are a premarital tax debt. To file for injured spouse, you must submit IRS Form 8379 within 60 days of receiving your CP16 notice. You can file Form 8379 electronically or by mail and processing times range from 8 weeks to 14 weeks. There is also an option to attach Form 8379 to your tax return.
How Can Wiztax Help?
The key is to get started. Ignoring these notices makes everything more complicated. Call us today at (866) 568-4593 to learn more about how we can help (we never charge for “consultations” or “investigations”). Or start here to take our free online evaluation. Regardless, we promise to save you thousands in fees.
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