Receiving a letter from the IRS can understandably cause anxiety. However, not all IRS communications are negative. The CP12 Notice is an official letter informing taxpayers that the IRS has made an automatic correction to their tax return—usually due to a mathematical error or missing information. In most cases, the result is either neutral or favorable to the taxpayer. Understanding this notice and knowing how to respond is essential to ensure taxpayer rights are protected.
What Does CP12 Correct?
Notice CP12 is generated when the IRS identifies an obvious error—often a miscalculation or omission—on a previously filed individual tax return. These corrections are performed under the IRS’s authority to make mathematical and clerical corrections without initiating a formal audit (per IRC §6213(b)(1)).
The most common issues corrected by a CP12 include:
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- Miscalculations of the Earned Income Tax Credit (EITC).
- Errors in the Child Tax Credit.
- Incorrect totals for deductions or income.
- Typographical or transposition errors in numeric entries.
These changes are made based on IRS records and may affect the refund amount or the amount due.
What Does the Notice Include?
A CP12 Notice will contain:
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- A comparison between the originally filed return and the corrected figures.
- A brief explanation of the adjustment made.
- The updated refund amount, if applicable.
- An estimated timeline for the corrected refund.
- Instructions on how to dispute the changes, including a 60-day window from the date of the notice to respond.
What Should Taxpayers Do?
Upon receiving a CP12, taxpayers should review the notice carefully and compare it against their original tax return. It is important to verify the accuracy of the IRS’s correction, especially in complex credit calculations.
If the taxpayer disagrees with the change, they have 60 days to submit a written explanation and supporting documents.
If the taxpayer agrees with the change, no action is required, and the IRS will process the corrected refund or adjustment automatically.
Why Does This Notice Matter?
A CP12 Notice does not initiate an audit, nor does it accuse the taxpayer of wrongdoing. Still, it is a legally significant communication and should not be ignored. Failing to respond to an incorrect adjustment may result in a binding acceptance of that change.
The issuance of a CP12 underscores the importance of accurate return preparation. Whether filing independently or through a tax professional, ensuring correctness at the outset helps avoid issues later. Repeated CP12 notices may signal deeper issues and could trigger further IRS scrutiny over time.
We Can Help!
IRS Notice CP12 is a procedural communication to inform taxpayers of automatic return corrections. While generally non-adverse, it carries legal significance and warrants careful review. Prompt attention and professional advice can prevent complications and ensure that the taxpayer’s position is properly represented.
If you have received Notice CP12 and do not fully understand the reason for the adjustment—or if the correction significantly impacts your return—contact our office for a confidential consultation. Our team at JH Tax Law can help clarify the matter and ensure that all available rights and remedies are preserved.