Why Did I Receive IRS Letter LTR 4464C and What Should I Do?
Understand why you received IRS Letter LTR 4464C, its impact on your tax return, and the steps you should take next.
Receiving an IRS Letter LTR 4464C can be unsettling for taxpayers, as it signals the IRS is reviewing your tax return. This notification means the agency needs additional time to verify certain information before processing your return.
Reasons the IRS Sends This Letter
The IRS issues Letter LTR 4464C when discrepancies or irregularities are detected in a tax return. These reviews ensure compliance with tax laws and help prevent fraud. A significant change in income or deductions compared to prior years, such as a large increase in charitable contributions without proper documentation, may prompt this letter.
Discrepancies between your tax return and third-party data, like W-2s or 1099s, can also trigger a review. The IRS uses automated systems to cross-check reported information, and mismatches, such as unreported income or incorrect Social Security numbers, may result in further scrutiny.
Claims for certain credits or deductions, such as the Earned Income Tax Credit (EITC) or Child Tax Credit (CTC), may also require additional verification. Taxpayers claiming these credits may need to provide documentation to confirm eligibility.
Required Documents and Information
Receiving Letter LTR 4464C means you’ll need to gather documentation to address the IRS’s concerns. The necessary documents depend on the specific issues under review. For income verification, W-2s or 1099s are critical to substantiate reported figures.
For deductions or credits, supporting documents are essential. For example, Form 1098 may be required for mortgage interest deductions, and charitable contributions need to be backed by receipts or acknowledgment letters. Credits like the EITC might require proof of residency and relationship for a qualifying child.
In some instances, the IRS may request identity verification, such as a Social Security card or government-issued ID. Carefully review the letter to determine the exact documents needed for your situation.
Potential Effect on Processing Your Return
Letter LTR 4464C can delay your tax return’s processing. The review halts the normal processing timeline, often extending it beyond the typical 21 days for electronically filed returns. If additional documentation is required, the delay may be prolonged.
This can impact financial planning, particularly for taxpayers relying on a timely refund. If you owe taxes, the review could also affect payment schedules. Promptly addressing the IRS’s requests and providing accurate documentation can help reduce delays and minimize potential penalties or interest.
Recommended Actions
Upon receiving Letter LTR 4464C, carefully read the letter to understand the IRS’s specific concerns. This will guide you in determining the documentation required. IRS Publication 556 offers helpful insights into the examination process and your rights as a taxpayer.
Consider consulting a tax professional, such as a certified public accountant (CPA) or enrolled agent, especially if the issues are complex. These professionals can help you prepare a complete and accurate response, ensuring compliance with tax laws and addressing any discrepancies.
Possible Outcomes
The IRS review initiated by Letter LTR 4464C can result in several outcomes. One possibility is that no issues are found, and your return is processed as originally filed, with any refund issued promptly.
If discrepancies are identified, the IRS may propose adjustments to your return, such as changes to reported income, deductions, or credits. Taxpayers have the right to contest these adjustments by providing additional documentation or requesting a formal review. If the IRS determines an underpayment of taxes, penalties and interest may be assessed under Internal Revenue Code Section 6662, which addresses accuracy-related penalties.