Why Did I Receive an IRS Letter 3064C and What Should I Do?

Receiving a letter from the IRS can be unsettling, especially if you weren’t expecting it. Letter 3064C typically relates to discrepancies or missing information in your tax filings. While not necessarily an indication of wrongdoing, ignoring it could lead to further complications with your tax account.

Reason for Letter 3064C

The IRS issues Letter 3064C when it finds inconsistencies in a taxpayer’s records that need clarification or correction. This often happens when reported income, deductions, or credits do not match the agency’s records. The IRS cross-references tax returns with data from employers, financial institutions, and other third parties, and any mismatch can prompt this letter.

A common reason for receiving this notice is a discrepancy in reported income. If a taxpayer’s W-2 or 1099 forms indicate higher earnings than what was reported, the IRS may request an explanation or additional documentation. Similarly, if a taxpayer claims a deduction or credit that does not align with IRS records—such as an Earned Income Tax Credit (EITC) or Child Tax Credit (CTC) exceeding allowable limits—the agency may seek verification.

Letter 3064C may also be issued due to missing or incomplete information. If a taxpayer fails to provide required details, such as a Social Security number for a dependent or documentation for a claimed deduction, the IRS may request clarification before processing the return. This can also occur when two individuals claim Head of Household status for the same dependent, triggering a conflict.

Common Triggers for Receiving This Letter

Errors in tax return calculations frequently result in Letter 3064C. Even minor mistakes, such as miscalculating taxable income or incorrectly applying tax credits, can raise red flags. The IRS uses automated systems to verify returns, and discrepancies—such as an incorrect standard deduction amount or an overstated retirement contribution—can prompt further scrutiny.

Unreported income is another common cause. Many taxpayers overlook earnings from freelance work, rental properties, or investments, particularly when they do not receive official tax documents like a 1099-NEC or 1099-B. The IRS receives copies of these forms directly from financial institutions and businesses, meaning any omission may trigger a notice.

Self-employment tax issues can also lead to this letter. Independent contractors and gig workers must report both income and applicable self-employment taxes, currently set at 15.3% in 2024. Failing to calculate or pay the correct amount, especially when no estimated tax payments have been made, can result in the IRS questioning the return’s accuracy.

Sections That the Letter May Contain

Letter 3064C typically begins with a summary of the issue the IRS has identified. It outlines the specific concern with the taxpayer’s return, such as a mismatch in reported figures or missing documentation. The letter references the tax year in question and may cite the source of the conflicting data, such as an employer or financial institution.

The notice often includes a breakdown of any proposed changes to the taxpayer’s account. This section details potential adjustments, including recalculated tax liability, penalties, or interest that may apply. If the IRS believes additional tax is owed, the letter specifies the amount and the reasoning behind the revision. Any penalties, such as failure-to-pay or accuracy-related penalties under Internal Revenue Code 6662, will be itemized along with applicable interest rates, which are adjusted quarterly and currently stand at 8% for underpayments as of 2024.

Instructions for responding are also included, outlining the steps the taxpayer must take to resolve the matter. This may involve submitting missing forms, providing supporting documentation, or agreeing to the IRS’s proposed changes. If the taxpayer disagrees, the letter explains how to contest the findings, typically by filing a written response with supporting evidence. Deadlines for response, often set at 30 or 60 days, are clearly stated.

Potential Adjustments to Filing

If the IRS determines that changes are needed, modifications to taxable income, deductions, or credits may be made. Taxpayers who underreported investment income, for instance, could see an upward adjustment to total earnings, leading to a higher tax liability. This often occurs when brokerage firms report capital gains on Form 1099-B, but the taxpayer fails to include them. In such cases, the IRS may recalculate tax owed based on default cost basis assumptions, which can inflate taxable gains if proper documentation is not provided.

Adjustments to deductions and exemptions can also impact tax obligations. If the IRS disallows a claimed deduction—such as business expenses reported on Schedule C—it may increase taxable income and trigger self-employment tax recalculations. Similarly, treating capital expenditures as deductible business costs instead of amortizing them under Internal Revenue Code 167 could reduce deductions and lead to a reassessment of tax due.

Required Information Submission

Responding to Letter 3064C often requires submitting additional documentation to clarify or correct discrepancies. The specific information needed depends on the issue outlined in the letter. If the IRS is questioning reported income, taxpayers may need to provide copies of W-2s, 1099s, or other income-related statements. In cases involving deductions or credits, supporting documents such as receipts, bank statements, or proof of eligibility for tax benefits may be necessary.

For those disputing the IRS’s proposed adjustments, a well-documented response is essential. This may include a written explanation along with relevant tax forms or amended filings. If the issue involves a misreported dependent, documents such as birth certificates, school records, or custody agreements may be required. The IRS sets deadlines for submission, and failure to respond in time could result in the proposed changes being finalized, leading to additional tax liability or penalties.

Possible Follow-up Notices

Once the IRS reviews the submitted information, it may issue a follow-up notice confirming whether the matter has been resolved or if further action is required. If the taxpayer’s documentation sufficiently addresses the concerns raised in Letter 3064C, the IRS may send confirmation that no further adjustments will be made.

If the IRS determines that the provided information does not fully resolve the issue, it may issue a Notice of Deficiency (CP3219A), formally notifying the taxpayer of its intent to adjust the return. This notice gives the taxpayer the option to agree to the changes or dispute them by filing a petition with the U.S. Tax Court within 90 days. In some instances, the IRS may request further clarification or additional documentation. Continued nonresponse or failure to provide adequate support could result in enforced collection actions, such as liens or levies, if additional tax remains unpaid.