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A CP79A notice means that you can’t claim certain tax credits for the next two years. This is because you previously claimed a credit you were found ineligible for.
Why does the IRS send this notice?
You were previously found ineligible for one of the following refundable credits that you claimed:
- Earned Income Tax Credit
- American Opportunity Tax Credit
- Child Tax Credit
- Additional Tax Credit
- Credit for Other Dependents
The IRS found that you improperly claimed the credit due to an intentional or reckless disregard of the rules.
You won’t be able to claim these credits at all for the next two years. If you claimed the credit for an ineligible child or dependent, you can’t claim the credit for any child or dependent during the ban. The ban does not just apply to the child or dependent who was ineligible.
You won’t be able to claim these credits in the future unless you provide proof that you’re eligible. To do so, you will need to attach Form 8862 to your tax return in the year in which you wish to claim the credit.
How do I appeal the two-year ban?
To appeal the two-year ban, you must request a reconsideration of your original audit or appeal the notice that you were found ineligible for the credit. In other words, you can’t directly appeal a CP79A notice. Instead, you go back to the original letter from the IRS that said you weren’t eligible to claim the credit and appeal that letter.
To reverse the ban, you must show either that:
- You were in fact eligible for the credit.
- You did not recklessly or intentionally disregard the rules when you improperly claimed the credit.
How do you file your taxes in the year you’re banned from claiming the EITC or other tax credits?
If you’re using tax preparation software to file your tax return, you need to pay close attention. The software will ask you questions like whether you have children or were enrolled in college courses. The software is trying to check if you’re eligible for a tax credit, but it doesn’t know if you’re banned from taking a tax credit.
Being banned from taking a tax credit is an unusual situation. Most software won’t directly ask you if you’re banned from claiming a credit. However, the software only knows what you tell it.
When you get to the software form for a credit you’re not eligible for, check for a way to edit that form manually. The software may have a help button, or you may need to contact customer support.
If you’ve hired a tax preparer, be sure to give them a copy of your CP79A Notice so they know what credits you’re eligible for.