The Internal Revenue Service (“IRS”) is attempting to pre-verify tax refunds before they are issued. Taxpayers are being notified of this verification process by letter. These letters, “4464C” and “CP5” state that the IRS is reviewing one or more of the following items on your tax return:
Income you reported (W-2 and 1099)
Income tax withholding amounts you reported
Claims for tax credits made on your return
Business income reported on your return
The letter also informs you that although the IRS will generally “deal directly with your or your duly authorized representative” they may also contact others to verify the information on your return. Generally, you do not need to do anything when you receive one of these letters. The IRS will contact you if documentation is required to finish the review.
It is important to note that receiving one of these letters does not mean you are being audited by the IRS. The review process is relatively new and is one of the ways the IRS is attempting to combat identity theft and the issuing of inaccurate refunds.
Refunds selected for verification can be delayed for 45 to 60 days. Since this practice is new, we do not know exactly how long the process will take. However, if you are experiencing financial hardship you may be eligible for Taxpayer Advocate Service (TAS) assistance.
As always, we are here to answer any questions you might have regarding IRS notices and any other tax related matters.