IRS Letter 12C (officially labeled LTR0012C) is a notice that the IRS needs more information before it can process your return. The most common reason is a missing form.
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How can you identify an IRS Letter 12C?
The letter will come in the mail (never email) and be on official IRS letterhead. The letter number will be at the top of the page and may be abbreviated as LTR 12C or in the long-form LTR 0012C.
It will contain a phone number, but you should use the numbers on the IRS website if you’re unsure of the letter’s validity.
Why does the IRS send letter 12C?
The IRS sends this letter for three reasons.
- Missing forms or schedules on an individual tax return.
- Verification of income, withholding, or credit amounts. For example, a missing W-2.
- Documentation needed related to the Premium Tax Credit (Obamacare subsidy).
The letter does not mean you did or did not correctly calculate your taxes. It simply means the IRS needs more information to verify your tax return.
What should you do in response to IRS Letter 12C?
The IRS will tell you exactly what information they need. This might be a form you receive from an employer or healthcare provider, or it could be a form or schedule you were supposed to complete when you filed.
There are three general outcomes.
- You track down the documents and they exactly match your tax return, so there should be no changes to your taxes owed.
- The documents don’t match your tax return, so the IRS will recalculate your taxes owed. If you underpaid, interest and penalties may be added.
- You can’t find the documents, which may lead to the IRS disallowing deductions or credits, using its own calculations, or performing an audit.
If you’re in the first category, it’s probably safe to return the documents as instructed in the letter. If not, you may wish to seek professional advice about whether you can avoid penalties and how to support your tax return.
Should you file an amended tax return?
The IRS generally recommends that you do not file an amended tax return. It will make any necessary adjustments to your original return based on the information you provide.
However, if you discover additional errors or find that the information substantially changes your tax return, it may be in your best interest to go ahead and amend your return.
What happens if the amount you owe changes?
If the amount you owe changes, the IRS will send you a bill. You have several options depending on whether you agree or disagree with what you owe.
If you underpaid your tax, interest and penalties will usually apply from the original due date of the return. To reduce the penalties and interest you’ll have to pay, make payment arrangements as soon as possible.
How long do you have to respond to IRS Letter 12C?
The deadline to respond is generally 20 days from the date on the top of the letter. Check the specific instructions on your letter.
If you disagree with the letter, are unsure how to respond, or believe it may lead to penalties, you should contact a tax professional immediately.