IRS Notice CP11A: Mistake Claiming the Earned Income Tax Credit

If you’ve received a CP11A Notice, the IRS believes you made a mistake when claiming the Earned Income Tax Credit and owe additional tax. You can either pay the requested amount or disagree with the changes.

Why did the IRS send me a CP11A notice?

If you received a CP11A notice, the IRS either believes you didn’t qualify for the Earned Income Tax Credit or you received the wrong amount the wrong amount. Since a tax credit reduces what you owe or increases your refund, you owe money to the IRS.

Here is a sample notice.

What’s the difference between IRS Notice CP11A and CP11?

Both notices mean the same thing that the IRS believes you made a mistake and owe money. The only difference is that a CP11A Notice is specifically about the Earned Income Tax Credit, while a CP11 Notice is a general tax notice that can cover other types of issues.

What should you do about this tax notice?

If you receive a CP11A Notice, you should:

• Confirm your eligibility for the Earned Income Tax Credit.
• Ensure that you completely and correctly filled out Schedule EIC and related forms when you filed your return.
• Gather any supporting documents requested by the IRS.

Some changes will be simple such as you mistakenly included a child who was too old to qualify, while others may be more complex.

Caution: Think twice before agreeing simply to get rid of the IRS because the amount they say you owe is small. If the IRS then decides that you recklessly, intentionally, or fraudulently violated the rules, you might end up with a CP79A notice banning you from receiving the Earned Income Credit for the next two years (ten years for fraud).

What do I do if I agree with what the IRS says I owe?

If you agree with the IRS adjustments to your tax return, you should pay as soon as possible. When you underpay your taxes, even because of a mistake, the IRS charges interest and penalties from the original due date of your tax return.

The notice deadline means that the IRS won’t do anything else until then, but it doesn’t mean interest and penalties on the unpaid tax balance won’t start until then.

What do I do if I disagree with what the IRS says I owe?

The IRS may adjust your Earned Income Credit because you made a mistake on your tax return or didn’t provide enough information. However, you have the right to fix your error and receive the full amount of the credit you’re entitled to.

You usually have 60 days to respond to a CP11A notice. Send a written explanation of why the IRS adjustments are wrong to the mailing address or fax number in your notice. Provide copies of any documents that show why you are right and the IRS is wrong.

The IRS says they can resolve some issues by phone. However, you will usually sit on hold for hours. It’s usually better to mail or fax your response form.

The IRS will send you a letter either agreeing with what you said, sticking to what your tax notice says you owe, or changing the amount you owe.

If you still disagree, you can follow the instructions on that letter to appeal. It usually takes six weeks for the IRS to respond, but they’ve been taking far longer (months in some cases) due to staffing issues caused by COVID-19.

What do I do if I don’t know if the IRS adjustments are correct?

The IRS notice should have an explanation as to exactly why they’re making an adjustment. Compare that to your understanding of your tax situation.

You may also need to research the Earned Income Tax Credit requirements. If you don’t want to do this yourself, you can contact an Enrolled Agent or CPA.

How do I pay a CP11A Notice balance?

If you mail a check payment, be sure to enclose the payment coupon with your payment. You can also use the IRS website’s electronic payment options, including ACH, debit card, or credit card. Send your payment as soon as possible to avoid any additional late payment penalty.

Can I get a payment plan if I can’t pay what my Notice CP11A says I owe?

First, make a partial payment if you can to reduce your interest and penalties.

If you can’t pay what you owe, you can request an installment agreement. This is a payment arrangement that lets you make monthly payments.

If you haven’t had any other tax issues recently, you may be able to qualify for IRS penalty relief and have the penalties taken off after you pay your balance.

How do I stop this problem from happening next year?

The IRS recommends that you file electronically to avoid computational mistakes. If you use commercial tax software, the software will ask questions to decide if you qualify for the credit and how much you can claim.

In some cases, the IRS computers just have trouble matching up the information they get from multiple sources. If you were able to show the IRS you were right by providing additional documentation, you can hope they won’t bother you again next year. If they do, at least now you know what to do.

Why did the IRS audit my return?

The IRS automatically checks all income tax returns that claim the Earned Income Tax Credit using computerized screening. It compares the information it gets from third parties like W-2 and 1099 forms to see if it matches what you put on your tax return. It also checks if multiple people claimed the same dependent. If the computer can’t match everything up, it will tell a human to take a closer look.

In addition, the IRS selects tax returns for audit using random sampling. There is a lot of fraud related to the Earned Income Tax Credit, so returns with this credit get audited more. It doesn’t mean the IRS thinks you did something wrong. You just won this lottery instead of the Powerball.

If you’ve been audited over this or other issues in the past, most tax pros believe this also increases your chances of being audited again. However, the IRS won’t say exactly how it picks returns to audit so people can’t try to game the system.

Conclusion

If you got a CP11A notice, it doesn’t have to mean you did anything wrong. Sometimes you might have made a mistake, but the IRS also might not have enough information.

If you think you claimed your Earned Income Tax Credit correctly, you can send a written explanation to the IRS of why you shouldn’t have to pay more. If you don’t feel comfortable doing this yourself, you can get an Enrolled Agent or CPA to help you.