What Is IRS Stop 6525 and How Should You Respond to It?

Receiving a notice from the IRS can be stressful, especially when it includes unfamiliar terms like “Stop 6525.” This reference on your letter indicates that your tax return requires further review before processing continues. While this may delay any expected refund, understanding why you received the notice and how to respond can help resolve the issue efficiently.

Purpose of Stop 6525

The IRS uses Stop 6525 as an internal designation for tax returns flagged for additional verification. This review ensures the accuracy of reported income, deductions, and credits while also confirming the taxpayer’s identity when necessary. Though the IRS does not publicly disclose the specifics of its internal coding system, Stop 6525 generally signals a temporary hold on processing.

This designation is often linked to fraud prevention and compliance efforts. The IRS uses automated systems and manual reviews to detect discrepancies, and when certain risk factors appear, Stop 6525 may be applied. This does not necessarily mean there is an issue with the return, but additional steps are required before it can be finalized.

If a return contains information that differs from prior filings, the IRS may require additional proof to confirm the taxpayer’s identity. The agency has expanded fraud prevention measures, including the Identity Protection PIN (IP PIN) program and enhanced data-matching techniques. Taxpayers flagged under Stop 6525 may need to provide documentation to verify their identity or substantiate specific entries on their return.

Common Triggers for Receiving the Notice

One of the most common reasons for receiving a Stop 6525 notice is discrepancies between the information reported on a tax return and the data the IRS has on file. The IRS cross-checks returns against W-2s, 1099s, and other income statements submitted by employers and financial institutions. Even minor differences, such as rounding errors or misreported amounts, can trigger a review.

Certain credits and deductions increase the likelihood of a return being flagged. The Earned Income Tax Credit (EITC), Child Tax Credit (CTC), and American Opportunity Credit (AOC) require additional substantiation due to their potential for misuse. If the IRS cannot verify eligibility based on the information provided, it may request further documentation. Similarly, large deductions for self-employment expenses, charitable contributions, or unreimbursed business costs may prompt additional scrutiny.

A taxpayer’s filing history can also play a role. Those who have previously amended returns, been audited, or had underreported income may face increased scrutiny. A history of late filings or unpaid tax liabilities can also lead to a review. Additionally, returns that differ significantly from previous years—such as reporting a sudden increase in income, claiming new deductions, or switching from standard to itemized deductions—may be flagged.

Potential Effect on Refunds

When a return is flagged with Stop 6525, processing delays are common. Refunds that are typically issued within 21 days for electronic filings or six weeks for paper returns may take much longer. The length of the delay depends on the complexity of the review and whether the IRS requires additional information.

For taxpayers relying on their refund for essential expenses, this delay can be frustrating. The IRS does not pay interest on delayed refunds unless they exceed a certain timeframe—typically 45 days after the filing deadline.

If the review results in adjustments, the final refund amount may differ from what was originally expected. The IRS may reduce the refund if errors are found in reported income, deductions, or credits. In some cases, taxpayers may even owe money instead of receiving a refund. If an adjustment is made, the IRS will issue a notice explaining the changes and providing options for disputing any discrepancies.

Required Documentation

Gathering the proper documentation is essential when responding to an IRS inquiry related to Stop 6525. The specific records needed depend on the nature of the review, but taxpayers must substantiate the figures reported on their tax return with official financial statements, receipts, or third-party confirmations.

The IRS may request copies of W-2s, 1099s, or other income-related documents to verify reported earnings. Self-employed individuals may need to provide profit and loss statements, bank statements, and invoices from clients.

For deductions under review, maintaining organized records is essential. Charitable contributions require written acknowledgments from the receiving organization, while medical expense deductions need invoices and proof of payment. Business expenses should be supported by receipts, mileage logs, and documentation showing the business purpose of each expense. If claiming a home office deduction, records proving exclusive and regular use of the space—such as utility bills and lease agreements—may be necessary.

In some cases, the IRS may request identity verification. Taxpayers may need to provide government-issued identification, a copy of a prior-year tax return, or a letter from the IRS containing a verification code. Responding promptly with complete and accurate documentation can help expedite resolution.

Steps to Address the Notice

Taking the right steps after receiving a Stop 6525 notice can help resolve the issue efficiently. The process generally involves reviewing the notice carefully, gathering necessary documentation, and responding within the timeframe specified by the IRS. Ignoring the notice or delaying action can extend processing times and lead to further complications.

Read the notice in its entirety to understand why the return was flagged. The IRS typically provides instructions on what is required, whether it’s additional documentation, identity verification, or clarification of reported information. If the notice requests specific forms or supporting records, gathering them promptly is necessary to avoid further delays.

Once all necessary information is collected, responding to the IRS within the deadline stated in the notice is important. The IRS may provide options for responding online, by mail, or through a phone call, depending on the nature of the review. If mailing documents, sending them via certified mail with tracking can provide proof of submission.

If the issue is complex or the taxpayer is unsure how to proceed, consulting a tax professional or an enrolled agent can help ensure a proper response. If the IRS accepts the provided information, the return will continue processing. If additional concerns arise, further correspondence may be required.

Consequences if Left Unresolved

Failing to address a Stop 6525 notice can lead to several negative outcomes, particularly for taxpayers expecting a refund or those with unresolved discrepancies. If the IRS does not receive a response within the specified timeframe, the return may remain in limbo, preventing any refund from being issued. In some cases, the IRS may disallow certain credits or deductions, resulting in a lower refund or an unexpected tax balance. If the IRS determines that the return contains errors and the taxpayer does not provide clarification, an adjustment may be made without their input.

Beyond refund delays, unresolved issues can lead to further IRS actions, such as audits or additional compliance reviews in future tax years. If the IRS suspects fraudulent activity or intentional misreporting, penalties and interest may be assessed. In extreme cases, failure to respond could result in the IRS filing a substitute return on the taxpayer’s behalf, which often excludes deductions and credits, leading to a higher tax liability.

Addressing the notice promptly and providing the requested information can prevent these complications and help ensure a smoother resolution.