Why Did I Receive IRS Letter LTR0012C and How Should I Respond?

Receiving a letter from the IRS can be unsettling, especially if you’re unsure why it was sent. The LTR0012C notice usually requires a response and often pertains to verifying information or resolving discrepancies in your tax records. Ignoring it can lead to complications, so understanding its purpose is essential.

Reasons You Might Receive LTR0012C

The IRS issues LTR0012C when there is missing or inconsistent information in your tax records. A common reason is identity verification. If the agency suspects fraudulent activity or needs to confirm your identity before processing your return, they may request additional details. This often occurs when reported income, deductions, or credits differ significantly from previous filings.

Another reason is a mismatch between your reported income and what third parties, such as employers or financial institutions, submitted to the IRS. If your W-2 or 1099 forms don’t align with IRS records, they may ask for clarification. For instance, if an employer reports a different income amount than what you filed or if investment income is missing or incorrect, the IRS will flag the discrepancy. Even minor differences can trigger a review.

Tax credits and deductions frequently prompt this notice. If you claimed the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), or other refundable credits, the IRS may request documentation to verify eligibility. This is especially common when multiple taxpayers claim the same dependent, leading to conflicts in the system.

Required Information or Documents

To respond to an LTR0012C notice, gather the necessary documents. If the letter pertains to a tax return under review, have a complete copy of your originally filed return, including all schedules and attachments. This allows you to compare your records with IRS data and identify discrepancies.

For income verification, collect pay stubs, year-end statements, or employer-issued tax forms such as W-2s and 1099s. If self-employed, provide profit and loss statements, invoices, and bank records showing business transactions. Investment income should be supported by brokerage statements detailing dividends, capital gains, and interest earnings.

If deductions or adjustments are questioned, gather receipts, invoices, or official statements proving eligibility. For example, student loan interest deductions require Form 1098-E from the loan servicer, while medical expense deductions need bills and proof of payment. Charitable contributions must be backed by acknowledgment letters from organizations, and business expenses require itemized records and receipts.

For dependents, documents proving residency and relationship may be necessary. A birth certificate, school records, or healthcare provider statements listing both the taxpayer’s and dependent’s names can serve as verification. If custody is in question, a court order or Form 8332 (Release/Revocation of Claim to Exemption for Child by Custodial Parent) may be required.

How to Respond

Read the entire notice carefully to understand what the IRS is requesting. The letter will specify a deadline, typically 30 days from the issue date. Missing this deadline can escalate the issue. Determine whether the IRS is asking for specific documents, additional information, or a written explanation. Some cases may require signing and returning a statement confirming the accuracy of previously submitted details.

Ensure all documents are legible, complete, and directly relevant to the inquiry. Including a cover letter summarizing your response can help clarify your submission, especially if multiple forms or statements are involved. When mailing documents, use certified mail with a return receipt for proof of submission. If responding electronically, follow the letter’s instructions for using the IRS’s secure online portal or faxing documents.

If you believe the notice was sent in error, contact the IRS before submitting a response. The letter includes a contact number, and speaking with an IRS representative may clarify the issue. In some cases, the matter can be resolved over the phone without additional documentation. If the issue is complex, consulting a tax professional or enrolled agent can help ensure accuracy and avoid miscommunication.

Consequences of Not Responding

Ignoring an LTR0012C notice can lead to tax return adjustments, penalties, and interest charges. If the IRS does not receive a response, they may disallow deductions or credits in question, increasing the amount owed. This can be significant if refundable credits such as the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) were part of the return.

Failure to respond can also result in penalties for accuracy-related errors, typically 20% of the underpaid amount. Interest accrues daily on any unpaid balance from the original due date of the return, increasing the financial burden over time.

If identity or income verification is unresolved, the IRS may freeze tax refunds or place the return under extended review, delaying processing for months. If the issue remains unaddressed, the IRS may issue a Notice of Deficiency (90-day letter), limiting the taxpayer’s ability to dispute changes without petitioning the U.S. Tax Court.