CP75 and CP75A notices are requests for additional proof that you qualify for a credit you claimed on your tax return. This is a tax audit.
Notices and Forms You May Receive
You will receive either IRS Notice CP75 or IRS Notice CP75A plus a separate form or forms to respond to the specific issue the IRS is auditing.
Receiving a notice does not mean you weren’t eligible to claim a tax credit. You may have made a mistake when filing your tax return that you can easily fix.
The IRS also routinely audits tax credits to make sure people aren’t filing false claims. They’re basically doing a receipt check like when you leave a store.
|Audit notice, the IRS needs more information
|Audit notice, the IRS needs more information
|Documents you need to send to claim the Earned Income Credit on the basis of a qualifying child or children for tax year XXXX
|Supporting documents to prove Head of Household filing status
|Premium Tax Credit verification — send documentation that shows you’re entiled to claim the Premium Tax Credit
|Explanation of how to get tax help if English isn’t your first language
How should I respond?
The CP75 notice will tell you what information the IRS needs. You can use the included response form. If you don’t have the original documents they asked for, talk to a tax professional about alternative ways to prove your eligibility.
See also: How to Write an Explanation Letter to the IRS
You may want to check if your tax preparer included an audit defense service that you can use to help you.
You should mail your response form to the address or fax number listed on your notice. If you aren’t sure the notice is real, call the IRS first at the number on the IRS website instead of on your notice.
What happens if I don’t return the response form?
The notice usually gives you 30 days to respond. If you don’t respond to the notice, the IRS will generally disallow the credit. You will owe additional tax equal to the amount of the disallowed credit plus interest and penalties.
In some cases, if you don’t respond or the IRS disallows your credit, you may lose the ability to claim the tax credit in future years even if you qualify. For example, if the IRS disallows your Earned Income Credit, you may get a CP79A Notice banning you from claiming the credit for two years.
What happens when I respond?
The IRS requests specific documentation. As long as you submit the required documents and were eligible for the credit, the IRS will typically close the audit with no changes to your tax credits.
In some cases, the IRS may reject your documentation because it wasn’t what they requested or is missing details. They will usually notify you and give you another chance to send what they need.
What if I realized I wasn’t eligible for the tax credit?
If you realize you aren’t eligible for the tax credit you claim, you may want to respond to the notice saying that you made a mistake claiming it. This may reduce your chances of being banned from taking tax credits in the future. It will also ensure that you can receive your bill and pay your balance sooner and reduce the interest and penalties that you have to pay.
You may also qualify to request a waiver of your penalties.
If you can’t afford to pay your bill, explore whether it’s better to use a credit card or IRS payment plan.
What happens if the IRS says I wasn’t eligible for the credit?
If you weren’t eligible for the credit, you will owe additional tax. If the IRS held your tax refund, it will be reduced by the amount of the credit. If you didn’t have your tax refund on hold or your refund was less than your credit, you will need to pay the balance due. Interest and penalties apply to the unpaid balance starting from the original due date of your tax return.
In some cases, you can be banned from claiming the credit in future years. The IRS can disqualify you if they found you recklessly or intentionally broke the rules for claiming it. However, this can be open to interpretation.
What do I do if I believe I was eligible for the credit?
You have the right to appeal the IRS decision. The letter you receive will explain your appeal rights.
Since the credit can be worth several thousand dollars, you may want to contact an EA or CPA to help you. If this is your only tax problem, it’s usually not big enough for an attorney, but that’s also an option. If you can’t afford to hire someone, you may qualify to use an IRS Low Income Taxpayer Clinic.
When will I get my tax refund?
If the IRS audited you before sending your refund, they will hold your refund until the issue is resolved. It typically takes 30 days for the IRS to review your response, and they may accept your response or send you another notice and restart the process. Once the IRS makes a decision, your refund will typically take 4-6 weeks.
If the IRS holds your refund, they usually hold your entire refund. If you filed for a $2,000 refund with only $500 coming from the Earned Income Tax Credit, you’ll get $0 until you resolve the issue with your EITC. You won’t get $1,500 now while the IRS decides on the $500 EITC.
If the IRS audited you after you got your refund, it may hold future tax refunds until the issue is resolved. For example, if your 2021 tax return gets audited in late 2022, the IRS may hold your 2022 tax refund in case you owe money.
Who qualifies for the Earned Income Tax Credit?
To qualify for the Earned Income Credit, you must meet the following IRS requirements:
- Have earned income (from wages, tips, self-employment, etc.) under $57,414 for 2021. This limit goes up each year with inflation.
- Have investment income under $10,000 in 2021. Investment income is things like selling stocks or getting stock dividends. It does not include investments in your tax-advantaged retirement accounts.
- Have a valid Social Security number by the due date of your 2021 return (including extensions)
- Be a U.S. citizen or a resident alien all year
- Not file Form 2555 (related to foreign earned income)
- The amount you can claim varies based on your filing status and number of dependents
Special rules may apply if you’re a military member, clergy member, or if you or someone in your family is disabled. You can use the IRS Qualification Assistant to see if you qualify for the credit.