If you get a notice from the IRS indicating that your refund check amount has changed, there’s no need to panic. The IRS changes thousands of refund checks every year, so having your refund check amount changed is not an indication of wrongdoing. Understanding why the change was made can help you know how to respond -- or if you even need to respond at all.
The IRS will change your routinely refund for many reasons, for example to correct a math error, to pay an existing tax debt or to pay a non-tax debt. If you make a math mistake on your return and the IRS catches it, you are mailed a letter advising you of the change, and it's not considered a big deal. In fact, the mistake might even be in your favor. You also hear from the IRS when they deduct a certain amount from your refund to cover a debt.
Understanding Your Notice
Whenever the IRS makes an adjustment to your refund amount, you are mailed a letter advising of the reason for the change. At the top of the IRS notice are the letters “CP”, followed by a number, which indicates their reason for sending the letter. A CP 42, for example, indicates that the amount of your refund has been changed to pay your spouse’s past due debt. A CP 102 indicates that your refund was changed because you made a miscalculation, and now you owe tax. A CP 112 indicates that, although a change was made, you’re still owed a refund. The body of the letter explains the changes. Often the adjustment does not relate to a math error, but to another unrelated federal debt, since the IRS can offset your refund to pay other federal debts, such as student loan debts. You do not need to take any action unless you feel the IRS made an error or miscalculation.
In some cases, the IRS will mail you a notice that requires you to submit additional information. For instance, if you submitted the wrong Social Security number on your income tax return, the IRS may mail you a letter requesting the correct Social Security number. In these instances, attach the information requested by the IRS and mail it to the address listed in the letter.
If the changes made by the IRS result in you owing tax, you owe the tax -- plus any penalties and interest -- from the date the tax was due. A failure-to-pay penalty is assessed for each month that the tax remains unpaid. This penalty is ½ of 1 percent of your unpaid tax, and it can end up being as much as 25 percent of your unpaid taxes. If you cannot afford to pay the tax in full, contact the IRS or make arrangements using the IRS's online payment agreement application.
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