Overview:

This notice is issued to inform the taxpayer that the IRS has made changes to their return which results in an adjusted overpayment that will be refunded within 4 to 6 weeks if no other taxes or past due debts are owed.

Sections of the CP 12:

  • Header Section

    This area contains the Notice Number, the applicable tax year, the notice date, your Social Security Number, and the IRS contact number.

  • Summary Section – “Adjusted Refund”

    The Summary Section of the CP12 provides a brief summary of the reason why the IRS has adjusted the refund and outlines the calculation of the revised refund amount.

  • Response Section – “What you need to do”

    If you agree with the adjustment you need to do nothing, other than adjusting your records to reflect the IRS adjustment. The bottom portion of the first page will be used as a Response Form if you disagree with the IRS notice. Be sure to check the box if you’re including documentation with that correspondence. See below for additional details.

  • Explanation Section – “Changes to Your [Year] Tax Return”

    This section is where the IRS will explain the changes they have made. Below the explanation, you will see a more detailed recalculation which is a comparison of the figures on your original return versus the IRS figures after the corrections.

Steps for reconciling the return to the notice:

  1. First, you will want to verify that the figures under the “Your Calculations” column, which is generally located on the last page of the CP12, match the figures on your copy of the originally filed tax return.

  2. Next, go to the “Changes to Your [Year] Tax Return” section. Review the adjustment reason(s) listed to determine the section of the return affected by the changes. Review this in conjunction with the revised figures under the “IRS Calculations” column.

  3. Once you have identified the area of the return being changed, sign back in to the applicable year’s TaxACT Online return (or open the applicable year’s TaxACT Desktop return). Navigate to the specific section(s) of the Federal Q&A to review your entries for the item(s) in question.

Note: If you are trying to gain access to your existing prior year TaxACT Online account after October 31, there will be a nominal one-time Data Archive Service (DAS) fee required the first time you log back in to access your tax return.  For additional information, please see Data Archive Service (DAS).

    • Navigation to the most common forms are listed below for your convenience:

Ø Form 1099-R 

Ø Form W-2

Ø Form 1099-MISC

Ø Form 1099-INT and Form 1099-DIV

Ø Form 1099-B

Ø Form 1099-G

  1. In order to reconcile the return with the proposed changes outlined on the notice, you will need to correct your entries by adding or modifying the information. If you have not done so already, please be sure to print a copy of your originally filed tax return before making any changes. If you’re not sure where the problem lies or exactly what changes are being made, contact the IRS using the phone number provided on the first page for further clarification.
    • The return should now reconcile to the column “IRS Calculations” under the “Changes to Your [Year] Tax Return” section.

    • Note: Generally, when an IRS notice is received, the IRS prefers you do NOT file an amended return. Depending on your response (agree, disagree, or partially disagree), the IRS will update their records accordingly. You simply need to print a revised return for your own records.

    • Print a copy of the revised return:

Ø Printing Your Return – TaxACT Online

Ø Printing Your Return and Individual Forms – TaxACT Desktop

  1. You can now respond to the IRS notice.
    • AGREE: If you agree with the proposed changes, no further action is required other than updating your own tax records (see Step #4). You will receive your adjusted refund amount within 4 to 6 weeks.

    • DISAGREE: If you disagree with the adjustment and do not believe you are entitled to the additional refund or should be receiving a smaller refund, it is suggested you contact the IRS regarding your disagreement prior to cashing the refund check.

Explain why you do not agree in a signed statement. Attach the statement and supporting documentation to the Response Form and send it to the IRS within 60 days from the date of notice. If not, you will lose your right to appeal the IRS’s decision. Include your phone number (with the area code) and the best time of day to call. Be sure to write your SSN, the tax year, and form number (i.e. 1040, 1040A, or 1040EZ) on each page you’re attaching to the response form. Before mailing your response to the IRS, make a copy of the entire correspondence for your records. If possible, it is suggested you send the response through Certified Mail with Return Receipt requested. The IRS will then review the information and either reverse the proposed changes or forward your case for audit.


Sample CP 12:


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