A CP05 letter is triggered when the IRS selects a tax return for review to verify income, tax withholding, or credits, resulting in a temporary hold on the refund. It often occurs when reported figures do not match third-party data (W-2s/1099s), or due to random screening.
You filed your tax return and the IRS received it. The IRS is holding your refund while it is verifying the accuracy of your return, including one or more of the following you may have reported: credits, income (e.g., wages) and withholding that were reported on your return.
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.
This review is not an audit or inquiry, but frequently just a way to review your tax return information against other third-party tax reporting records. Generally, no immediate action is required upon the receipt of a CP05.
To avoid receiving a CP05 notice, ensure that your tax return is accurate. Double-check your information, provide all necessary documentation, and stay informed about inflation adjustments to avoid any mistakes. If you're claiming child tax credits, the CP05 notice may require you to verify your claims.
With Notice CP05 they don't request anything of you until they have finished their review of your return. Notice CP05A asks you to supply the IRS with documentation to support certain items on your return.
A request for expedited processing must be made in writing and must fully explain the compelling reason. Granting expedited processing is at the discretion of the IRS.
You generally shouldn't worry if your refund is "still being processed," as it means the IRS is working on it, but it might take longer than the typical 21 days due to common issues like errors, incomplete information, or claiming credits like the EITC/ACTC. Worry only becomes necessary if you receive an IRS letter requesting more information or if the "Where's My Refund?" tool shows a specific problem like fraud, but typically, it just means a longer wait, not no refund at all.
One-time forgiveness, officially known as First-Time Penalty Abatement (FTA), is an IRS program that allows qualified taxpayers to have certain penalties removed from their tax accounts.
These letters usually have to do with credits that have unclaimed or making sure your income is actually accurate or to make sure you qualify for the credits that you have claimed so they are under review for the 60 day timeframe to make sure that everything on your return is accurate.
Your refund
It may take up to 9 weeks to process your return after you verify it.
You know the IRS might be investigating you through official mail (first contact), phone calls (often with automated messages to IRS.gov), or in-person visits, but signs of a criminal probe include contact with IRS Criminal Investigation (CI) agents, subpoenas to you or your bank, questions to your accountant/bank, unusual account activity (freezing/refusing transactions), or agents suddenly going silent after an audit. Key indicators are official IRS letters, contact from CI special agents, third-party inquiries, and formal summonses for records, signaling serious scrutiny beyond a simple audit.
District offices select returns randomly sometimes for special research programs, but generally the returns are selected because they have good audit potential. The potential is discovered by a computerized system called the Discriminant Function System (DIF). In most cases, the decisionmaker is not the auditor.
The IRS has no maximum time limit when it comes to processing tax refunds, but after 45 days, it is required to pay interest on your refund. In most cases, you can expect the IRS to issue your tax refund within 21 days of filing your tax return.
Usually, it takes 4-5 weeks for the refund to be credited to the account of the taxpayer. However, if refund is not received during this duration, the taxpayer must check for intimation regarding discrepancies in ITR; check email for any notification from the IT department regarding the refund.
The IRS uses a combination of automated and human processes to select which tax returns to audit. Not reporting all of your income is an easy-to-avoid red flag that can lead to an audit. Taking excessive business tax deductions and mixing business and personal expenses can lead to an audit.
If you filed the tax return
We could take up to 60 days to complete this review. Please don't contact us prior to 60 days from the date of this notice since we won't be able to provide you any additional information. You can check your refund status at www.irs.gov/refunds or the IRS2Go mobile app for smart phones.
Why you received IRS Notice CP05. The IRS selected your return for review to verify one or more items on the return. The IRS is holding your refund pending the outcome of the review.
Your options to address IRS Notice CP05A
If you miss the deadline: If you do not respond, the IRS will disallow all or part of your refund and may send you a notice that additional taxes will be owed.
Which Taxpayers the IRS Audits Most Often. Oddly, people who make less than $25,000 have a relatively high audit rate. This higher rate is because many of these taxpayers claim the earned income tax credit, and the IRS conducts many audits to ensure that the credit isn't being claimed fraudulently.
What happens during an audit? Internal audit conducts assurance audits through a five-phase process which includes selection, planning, conducting fieldwork, reporting results, and following up on corrective action plans.