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A CP49 Notice: When the IRS Applies a Refund to Other Taxes You Owe

Posted by Brandon Keim | Feb 16, 2024 | 0 Comments

You're expecting a tax refund, but instead, you receive a “CP49 Notice.” It's understandable if you're surprised and disappointed, but it's important to understand what the notice means and what to do next.   

The Contents of a CP49 Notice

A CP49 Notice will include an explanation stating the original amount of an overpayment that would have been refunded to the taxpayer and how much of that was applied to the taxpayer's existing federal tax debt. 

The notice will also include the new refund amount. If there's any remaining overpayment, that new amount will be paid to the taxpayer. 

CP49 Notices also contain:

·        The notice number (the document will say it's a CP49)

·        The applicable tax year

·        The notice date

·        The taxpayer's Social Security Number

·        The IRS contact information (a phone number and address)

If the CP49 Does Not Clear a Tax Debt

If the CP49 does not clear a tax debt, a taxpayer should work with the IRS to address the remaining debt. The IRS may agree to a payment plan, settlement, or other negotiated resolution. However, if the taxpayer fails to do so, they risk having the IRS place a lien on their property or even ultimately seize and sell property to satisfy the debt.  

If the Tax Debt Belongs to a Spouse

If spouses file a joint tax return, and the overpayment is applied to the debt of one spouse, the other spouse can petition the IRS for “innocent spouse relief.” A spouse may be eligible for innocent spouse relief if they were unaware of the other's unreported income or additional errors. 

If the IRS' Calculation Was in Error

It is also possible that the IRS mistakenly applied the refund to other taxes. For example, the taxpayer may have already paid the amount, but it hadn't yet been processed. Or perhaps the taxpayer is the victim of identity theft, and the perpetrator's activity has corrupted their records. 

Whether you deserve a return or still have an outstanding debt you need resolved, don't try to resolve the issue on your own. Instead, contact a tax attorney as soon as possible. If you need help, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.

About the Author

Brandon Keim

A Certified Tax Law Specialist, CPA, partner at Frazer Ryan Goldberg & Arnold LLP, and former Senior IRS Trial Attorney, Brandon Keim holds an LL.M. in Taxation from Georgetown University Law Center.


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