IRS Notice CP27 informs you that the IRS adjusted your tax refund because the Earned Income Tax Credit (EITC) claimed on your return was disallowed or changed. This notice explains the reason for the adjustment and details the new, lower refund amount you will receive, or the resulting balance due.
Response Deadline
60 days from the date on the notice to respond if you disagree with the adjustment. If you agree, no response is necessary.
Notice CP27 is an official communication from the IRS stating that they disagreed with the amount of the Earned Income Tax Credit (EITC) you claimed on your tax return. The EITC is a refundable credit for low-to-moderate-income working individuals and families, and it has strict eligibility rules regarding income, filing status, and qualifying children. When the IRS processes your return, their systems flagged the EITC amount as incorrect based on the information they have on file (like W-2s, 1099s, and dependency rules). This adjustment means your original refund calculation is wrong. If the EITC was reduced, your refund will be lower than expected. If the EITC was completely disallowed, you might now owe the IRS money (a balance due). This notice is not a bill demanding immediate payment, but rather an explanation of the change to your account and a request for you to review the revised figures.
You received Notice CP27 because the IRS determined that the EITC you claimed was incorrect or invalid. Common reasons include: 1. **Qualifying Child Issues:** The child you claimed does not meet the relationship, age, residency, or joint return tests for EITC purposes, or another taxpayer claimed the same child. 2. **Income Discrepancy:** Your reported income (or Adjusted Gross Income) falls outside the allowed range for the EITC, or the IRS has different income figures on file. 3. **Filing Status Error:** You used a filing status (like Head of Household) that is incompatible with the EITC rules based on your circumstances. 4. **Prior Disallowance:** You were previously banned from claiming the EITC due to past errors or fraud, and you failed to file the required Form 8862 to re-establish eligibility.
Your first step is to carefully compare the figures on Notice CP27 with the figures on the copy of the tax return you filed. Immediate actions (within 24-48 hours) include reviewing the notice to understand exactly which part of the EITC calculation was changed. Short-term actions (within 1-2 weeks) involve gathering all documentation related to the qualifying child(ren) and your income (birth certificates, school records, utility bills, W-2s). If you agree with the IRS adjustment, no further action is usually required, and the IRS will issue the adjusted refund. If you disagree, you must write a letter to the IRS explaining why you believe the original claim was correct and include supporting documentation. Send your response via certified mail and keep a copy for your records. Long-term considerations include ensuring you meet all EITC requirements for future tax years, especially if this adjustment was due to claiming a non-qualifying child.
If you fail to respond and the IRS adjustment stands, your refund will be reduced, or you will have a balance due. If the adjustment results in a balance due, interest and penalties will begin accruing immediately after the original payment deadline (typically April 15th). More significantly, if the EITC was disallowed due to reckless disregard or intentional fraud, the IRS can ban you from claiming the EITC for two years (reckless disregard) or ten years (fraud). If you were already banned and failed to file Form 8862, you will remain ineligible. Ignoring the notice will finalize the adjustment, potentially leading to future collection actions if a debt is created.
Dexter can guide you through the entire response process step-by-step.
Get StartedIRS Notice CP12 is a positive notification indicating that the IRS reviewed your tax return, made changes (usually minor corrections), and determined that you overpaid your taxes. This notice confirms that you are due a refund, and it details the exact amount of the refund and how the calculation was made. It is generally good news, but you must review the changes to ensure accuracy.
IRS Notice CP21 informs you that the IRS has changed your tax return, resulting in an overpayment and a refund or credit. This notice confirms that the IRS processed an adjustment, such as correcting a math error or applying a payment, which increased the amount of money owed back to you. It is a positive notice, confirming a refund amount and often including interest paid on the overpayment.