How to Respond to an IRS Letter 112C

A Letter 12C from the Internal Revenue Service is a standard request for information, not a formal audit notice. The IRS sends this letter to verify specific items on your Form 1040 individual income tax return before it can finish processing. A prompt and complete response is the most effective way to resolve the matter and receive any due refund.

Understanding Your Letter 12C

A Letter 12C is sent when the IRS needs more information to process an individual income tax return. The letter itself is your primary guide for understanding what is required. It will clearly state the specific information the IRS needs, which could range from missing forms to verification of income or tax credits. You should carefully review the document to locate the response deadline, which is often 20 to 30 days from the date on the notice.

The reasons for receiving a Letter 12C are varied. The IRS may need to verify the amount of federal income tax your employer withheld, which is reported on Form W-2. Another reason is to confirm the estimated tax payments you made. The letter may also be sent to validate your eligibility for certain tax credits, such as the American Opportunity Tax Credit or to reconcile advance payments of the Premium Tax Credit.

Gathering the Necessary Documentation

You must collect the documentation needed to support the items questioned in the letter. If the IRS is asking about federal income tax withholding, you will need copies of your Form W-2 from your employer or Form 1099-R from a pension or annuity payer. For questions about nonemployee compensation, a Form 1099-NEC or 1099-MISC would be the relevant document.

If the letter questions your estimated tax payments, you will need to provide proof of payment. This can include copies of canceled checks (front and back), bank or credit card statements showing the payments to the U.S. Treasury, or confirmation details from the IRS Direct Pay or Electronic Federal Tax Payment System (EFTPS). Your final pay stub for the tax year can also be a useful document to help corroborate the figures on your W-2.

Should you find that you are missing any of these documents, you have several options for obtaining them. You can contact the original payer, such as your employer or financial institution, to request a copy. Another method is to use the “Get Transcript Online” tool on the IRS website, which allows you to access and print a Wage and Income Transcript showing data from returns the IRS has received, such as Forms W-2, 1099, and 1098.

How to Submit Your Response

Once you have gathered the necessary paperwork, submit it to the IRS. It is important that you only send copies of your documents, never the originals, as the IRS may not return your paperwork. Make clear and legible copies of every document you plan to send.

You have two primary methods for submitting your response: mail or fax. The Letter 12C will specify the correct mailing address and fax number to use. If you choose to mail your response, it is recommended to use a service that provides proof of delivery, such as USPS Certified Mail with a return receipt.

If you use fax, ensure you are using the number provided in the letter. Use a fax cover sheet that includes your full name, Social Security Number or Individual Taxpayer Identification Number, the tax year, and a reference to “Letter 12C Response.” Regardless of the method, you must also include a copy of the Letter 12C itself with your submission.

What Happens After You Respond

After you have sent your response, the IRS will review the information you provided. The standard processing time for this correspondence can be between 60 and 90 days. If the documentation you sent is sufficient, the IRS will finish processing your tax return. Any resulting refund can be expected within six to eight weeks after the IRS has accepted your response.

There are a few possible outcomes following your submission. The IRS may accept your information, and your return is processed as you originally filed it. Alternatively, the IRS may determine that an adjustment is necessary, and you will receive a notice detailing the changes and any resulting balance due or change in your refund. It is also possible the IRS may need additional information and will send another letter.

Failing to respond to a Letter 12C will result in the IRS disallowing the credits or payments in question. This action will likely create a tax liability, to which the IRS will add penalties and interest. If you do not receive any communication from the IRS after 90 days, you can follow up by calling the telephone number provided on your original Letter 12C.