IRS Notice CP75 is a critical correspondence informing you that the IRS is holding your tax refund because they need to verify the eligibility for refundable tax credits claimed on your return, such as the Earned Income Tax Credit (EITC) or Child Tax Credit (CTC). This notice initiates an audit process focused solely on these credits and requires immediate action to provide documentation proving your claims.
Response Deadline
30 days from the date of the notice. Failure to respond within this period will result in the automatic disallowance of the claimed credits.
Receiving Notice CP75 means the IRS has flagged your tax return for an audit specifically targeting refundable credits, primarily the Earned Income Tax Credit (EITC), Additional Child Tax Credit (ACTC), or American Opportunity Tax Credit (AOTC). The IRS is not questioning your income or deductions at this stage, but rather your eligibility to claim the qualifying child or student necessary to receive these credits. Your tax refund is frozen until you provide sufficient documentation to satisfy the IRS requirements. This notice will include a list of the specific credits being questioned and the documentation required to substantiate your claim, typically focusing on residency, relationship, and age tests for the qualifying person. If you fail to respond or cannot provide adequate proof, the IRS will disallow the credits, resulting in a significantly reduced refund or, potentially, a tax bill.
The IRS uses sophisticated computer matching programs to identify returns with a high probability of error regarding refundable credits. You typically receive CP75 for one of the following reasons: 1. **Qualifying Child Discrepancy:** The qualifying child claimed on your return was also claimed by another taxpayer (e.g., a non-custodial parent or another relative). 2. **Residency Test Failure:** The IRS lacks proof that the qualifying child lived with you for more than half the tax year. 3. **Prior Disallowance:** You claimed the EITC, CTC, or AOTC after having the credit disallowed in a previous year, triggering mandatory verification. 4. **Inconsistent Information:** Information on your return (e.g., filing status or income level) is inconsistent with the typical profile for claiming the specific credit. 5. **First-Time Claim:** You are claiming a complex refundable credit like the EITC for the first time, leading to automated review.
Immediate action is crucial. Do not ignore this notice, as your refund depends on a timely and accurate response. **Immediate Actions (Within 24-48 Hours):** Carefully read the entire Notice CP75, especially the checklist of required documentation. Note the deadline and the specific credits being questioned. Do not call the IRS immediately; first, gather your documents. **Short-Term Actions (Within 1-2 Weeks):** Gather all necessary proof, which usually includes birth certificates, school records, medical records, utility bills, and lease agreements showing the qualifying child lived with you. Organize these documents clearly. If you are unsure about the documentation, consult a tax professional (CPA or Enrolled Agent). Prepare a clear, concise cover letter listing every document you are submitting. Mail the package via certified mail with return receipt requested. **Long-Term Considerations:** Keep copies of the notice, your response package, and the certified mail receipt for your records. If the IRS still disallows the credit after reviewing your documentation, you have the right to appeal the decision.
Ignoring Notice CP75 or missing the 30-day deadline will result in the immediate disallowance of the refundable credits (EITC, CTC, etc.) that the IRS is questioning. This means your expected refund will be significantly reduced or eliminated entirely, potentially converting it into a tax liability that you must pay immediately. Furthermore, if the IRS determines the claim was made recklessly or fraudulently, you may face severe penalties, including a 20% accuracy-related penalty or, in cases of fraud, a 75% penalty. If the EITC is disallowed due to reckless or intentional disregard of the rules, you may be banned from claiming the credit for two to ten subsequent years.
Dexter can guide you through the entire response process step-by-step.
Get StartedIRS Notice CP71C is a notification informing you that the IRS has offset (applied) a tax refund or overpayment from one tax period to cover a tax debt you owe for a different tax period. This notice confirms that the offset transaction has been completed and provides a detailed accounting of how the funds were applied.
IRS Notice CP71A is an annual statement sent to taxpayers who have an existing Installment Agreement (IA) with the IRS. This notice serves as an annual reminder, summarizing the current balance due, payments received over the last year, and the remaining payment schedule. It is not a bill for a new liability but a status update on a pre-existing debt.
IRS Notice LTR5747C is an official letter from the IRS Taxpayer Protection Program (TPP) informing you that the IRS has received a tax return filed using your Social Security Number but requires identity verification before processing it. This letter is a critical security measure designed to protect you from tax-related identity theft and requires immediate action to prevent significant refund delays.