What You Need to Know About CP05 Notices and Withheld Refunds
Did the IRS send you a CP05 notice saying they’re holding your refund while they review your tax return? Did they say they need 60 days? Has it been more than 60 days?
We most often see people come in with a CP05 notice because not all of their W-2s are showing up in the IRS records. The CP05 notice doesn’t say this in plain language, so people often don’t know what is going on. They just know that the IRS said it would be 60 days, but usually, it has been much longer with no answer from the IRS about what the problem is or why the IRS isn’t giving the person their refund.
Usually, what has happened is that the taxpayer filed a tax return reporting wages, but the employer never sent a copy of the W-2 to the IRS. By requesting your “Wage & Income” transcripts from the IRS, you can see whether or not your employers filed all of your W-2s with the IRS. Visit this link to make this request: https://www.irs.gov/individuals/get-transcript
You’d think that if you sent the IRS a copy of your W-2 with your return, that would be enough. But the IRS doesn’t want to issue refunds until it has confirmation from the employer that you really earned the wages.
Unfortunately, the IRS doesn’t just explain this in the CP05. If they did you’d know to talk to your employer to find out what the problem is and get them to fix it.
If the employer doesn’t get that W-2 filed properly, the IRS is going to want to see not just your copy of the W-2, but paystubs, and maybe even canceled checks or bank deposits showing payment of the wages. They may also request a signed letter from your employer, on your employer’s official letterhead, stating how much wages you were paid in the year and how much taxes were withheld.
Where do you send this proof of your W-2 wages? The CP05 says you don’t need to do anything and doesn’t give you any way to contact the IRS. You can try calling the IRS’s “Automated Questionable Credit Unit” at 855-873-2100 and they may help.
