CP05 Notice From the IRS: What It Is & What You Need To Do
If you're like thousands of Americans, seeing a letter from the IRS in the mail might make your heart skip a beat.
No one ever wants extra interactions with the IRS. But one of the ways that can happen is by receiving a CP05 notice from the agency. A CP05 notice may not be anything to worry about, but you need to be informed.
When you get a CP05 notice, unfortunately, it means your anticipated refund won't hit your bank account quite yet. Instead, the IRS is taking another look through your tax returns. This notice isn’t yet the same thing as a full tax audit (thankfully), but you do have to pay attention, so you don’t miss any further communication from the IRS.
Here’s what a “CP05 notice” from the IRS means for you and what you should do if one turns up in your mailbox.
The Short Version
- A CP05 notifies you that the IRS is reviewing your tax return.
- The IRS will notify you within 60 days if it needs more information.
- You’ll get a CP05A or CP05B as a follow-up with further instructions.
- Within 30 days of the second notice, you’ll need to follow IRS instructions quickly and possibly send more information.
What Is a CP05 Notice?
A CP05 is a specific notice from the IRS that goes out to tax filers. This notice doesn’t require you to take any action — yet — but you want to read it carefully and keep it on file for now.
The CP05 notice simply notifies you that the IRS is reviewing your tax returns. That’s it. It doesn’t mean you messed up or that there’s necessarily anything wrong with your tax return forms, even if you did your taxes yourself. So take a deep breath and don’t panic!
Once you receive this notice, there’s not really anything you can do. Take note of when the CP05 notice arrived, and watch your mail around 60 days from that time. As the IRS states, they’re reviewing your tax returns, which generally means they will check your income, income tax withholding, tax credits, and business income.
Why Did the IRS Send Me a CP05 Notice?
Your knee-jerk reaction might be to take a defensive stance. You’re sure you filled out everything correctly and consulted with a tax professional. You believe your tax returns are airtight. But you still received this notice and delay from the IRS, which also delays any anticipated tax refund.
As the IRS notes, a CP05 may not mean that you made a mistake or were intentionally dishonest. Your return may have been selected randomly to verify details like income, expenses, and credits. It’s a pain because your tax refund is delayed, but you might still get that refund.
The IRS may determine that all your forms were correct and process your return immediately. It also may ask you for more information — likely further official documentation of income and tax withholding.
Read more >>> Where to Invest Tax Refund 2023
What To Do When You Get a CP05 Notice
After you painstakingly completed and filed taxes (hopefully on time!), you probably thought the hard part was done. Receiving that CP05 notice from the IRS is a big disappointment, but your first step after getting this form is to…wait. You don’t even need to (and shouldn’t) contact the IRS for 60 days.
It may be a good idea to verify the return address on the notice to be sure it’s from the IRS, not some other agency. While you’re at it, check to be sure it’s appropriately addressed to you in case of the unlikely possibility that the letter was delivered to the wrong person or address.
In that case, fill out IRS Form 14039, the Identity Theft Affidavit. This ensures the agency knows your situation and can take action to remedy the problem.
Around that 60-day mark, you need to be on alert. Watch your mail and IRS-verified bank account to see whether your refund shows up. If it does and all seems in order — great! This means the IRS has finished its review and doesn’t require any more information from you.
The other possibility is that you’ll receive either a CP05A or CP05B notice from the IRS within 60 days of the initial CP05 notice. These request specific information from you to help the IRS complete its review.
You can consult a tax professional if you’d like more peace of mind about the situation; they can help you navigate your questions. In particular, if you find IRS communication unclear, it’s wise to speak to a tax professional rather than rely on your own research.
Hire a tax pro >>> How to Find a Professional Tax Advisor
The CP05A or CP05B Notice
After the initial 60-day period of review, the IRS will either send your refund or send you another notification. As mentioned earlier, this will be the CP05A or CP05B notice, and they really are pretty similar. Whichever one you receive will explain what the IRS needs from you.
A CP05A simply means the IRS needs more information before issuing a refund. It should list which item(s) you must submit, generally related to income or tax withholding.
The IRS provides a bit more detail online about the CP05B notice. That notice indicates that the IRS received a tax return showing a specific refund amount, but the agency needs confirmation of reported income.
Whether you receive a CP05A or CP05B, the result is the same: it’s time to gather some documentation. You might have even started double-checking your income and withholding records during the first 60-day waiting period, just in case. Be sure to make and keep copies of any information you collect before sending it to the IRS.
The key here is to act quickly. Unlike the CP05 notice, the CP05A and CP05B come with tasks for you to complete, along with a 30-day deadline.
Other Tools To Assist You With a CPO5 Notice
Worrying is natural; waiting for the IRS to get in touch might be challenging. But here are some tools to guide you.
If You Want To Know Where Your Return Is
TaxpayerAdvocate.irs.gov is a handy website with resources like the Taxpayer Roadmap Tool that helps you pinpoint where the IRS is in processing your tax return.
According to the roadmap, your tax return could go through some or all of the following steps:
- Tax Return Preparation — Obviously, that’s your part, concluded when you file your tax return.
- Tax Return Processing — The IRS examines your documentation (CP05A is within this map segment).
- Collection — The IRS determines whether you owe money and asks you to pay.
- Screening Station for Exam — The IRS reviews the documentation you submitted.
- Appeals — A taxpayer files an appeal to protest the IRS’s decision.
- Litigation — The taxpayer and the IRS resolve disputes through legal action.
If You Want Someone To Work With the IRS on Your Behalf
If you're concerned about your rights, you have the right to hire someone to get in touch with the IRS on your behalf. This person would likely be an accountant or someone in a similar role.
To take this step, fill out an IRS Form 2848. That’s the Power of Attorney and Declaration of Representative that notifies the IRS of your plans to work with someone on your tax case.
You might also contact a low-income taxpayer clinic (LITC), which may be able to assist you for free or for a small fee.
What To Do if You Don’t Hear From the IRS in 60 Days
The IRS says not to bother contacting them during the 60 days after receiving the CP05 notice. It’s likely you’ll only encounter long wait times and be told that your tax returns are still under review.
However, if you still don't have a refund or an updated response from the IRS after 60 days, it’s time to be proactive. Use the toll-free number to call the IRS listed at the top right-hand corner of your CP05 notice.
Possible Next Steps After Your CP05 Notice
If the IRS notifies you that it has denied your refund, you might appeal if you believe you’re in the right. If the IRS says you need to provide additional proof of income, an explanation of withholding, tax credits, or other information, locate the information they need as quickly as possible.
It’s also a possibility that you’ll need to correct an error from your original tax return. You can file a 1040-X, an Amended U.S. Individual Income Tax Return.
The Takeaway: Follow Instructions on All IRS Communication
With any luck, the IRS will quickly iron out any issues with your latest tax forms, and you’ll get a refund immediately. Overall, if you’ve received a CP05 notice, just follow the directions provided promptly — and don’t be afraid to seek the guidance of a professional.
The tax man cometh:
- The 5 Best Types of Tax-Deferred Accounts
- Long-Term vs. Short-Term Capital Gains Tax
- Tax Guide to Cryptocurrency Investments