IRS CP45 Letter with $400 Reduction in Estimated Payment Credit

[mblatz01]

I received a letter last April with identifier CP45 from IRS after filing for tax year 2021. I understand this is regarding the IRS indicating they won't apply a tax overpayment to this year's (2022) estimated tax payments. The letter indicated that more information would be sent along explaining the adjustment, but it never was...sigh.

The difference between what I had overpaid and the change(s) IRS made that reduced that amount available for this year's estimated payments, i.e. where they felt my filing was in error, **was exactly $400.**

Does anyone have a good guess, or maybe actual experience, with this situation? Not just the CP45 letter, with is mostly informational, but such a round number of $400? Obviously, there is no point in actually calling them at the number on the letter (life is short, after all), so no need to suggest. Thanks...

[ErnieS0]

Did you receive a CP2000 notice? You said, “The difference between what I had overpaid and the change(s) IRS made that reduced that amount available for this year's estimated payments, i.e. where they felt my filing was in error, **was exactly $400.**”

The notice adjusting your return will explain why IRS said you owed $400 more in that than you listed on your tax return. Since your tax liability went up by $400, your refund (which you applied to your estimated payment) would be reduced by $400.

You can get a free IRS transcript and compare those numbers against your original filing if you don’t have the original adjustment notice.

See Get Your Tax Record.

[mblatz01]

Hello.  No, I've only received the CP45 letter indicating what happened (the reduction), but nothing subsequently that would indicate the why.

The $400 seemed very round-number to me, so I posted in hopes that others might have received same letter for same reason (whatever it might be), as opposed to something specific to me or my individual filing, i.e. a typo or fat finger mistake.

Thanks for tip about transcript...I'll look into it.

[VolvoGirl · Accepted solution]

First of all last April 2022 you filed your 2021 return (not 2022) and you applied some of your refund to 2022 which we are filing this year in 2023.

Sound like you need to reduce the amount you are applying from last year?  If it is applying your last year's refund to this year and you need to remove it......

Go to

Federal Taxes

Deductions and Credits

Then scroll way down to Estimates and Other Taxes

Other Income Taxes - Click the Start or Update button

Next page scroll down to 2021 Refund Applied to 2022

Click Start or Update and then delete the amount

[mblatz01]

"First of all last April 2022 you filed your 2021 return"  Yes!  Corrected in OP...thanks for the catch.

"Sound like you need to reduce the amount you are applying from last year?"  Probably, but I'll do the "Transcript" thing first to hopefully understand what the discrepancy is.  Thanks for the step-by-step guide for if/when I go to make adjustments.

[mblatz01]

This may not be the right thread or right forum to ask...but how in regard to the $400 fee/penalty discussed above (it seems gratuitous!) would one go about asking IRS for a one-time forgiveness or forbearance (or whatever they call it)?

[JohnW152]

Your only real option, if you're not willing to call, is to write back to the IRS on the notice.  Explain your concerns, and your suspicion that the $400 might be a penalty of some sort. 

It's my opinion that it's not a penalty, as there would normally be a computation in the letter that would reflect a penalty, and the IRS would generally cite the Internal Revenue Code when assessing a penalty.

Looking at a transcript as suggested by ErnieS0 would also be a good start, just to see if you can locate a $400 difference anywhere. You can identify the codes on the transcript by looking in Section 8A, Master File Codes - Transaction, MF and IDRS Collection Status, Freeze and IDRS Status 48, Restrictive and Filing Requirements in the 2022 version of Document 6209 - ADP and IDRS Information,   

I know you're not keen on calling the IRS, but I will point out that it has a callback system that can use to connect you with a representative without waiting on hold.  If you'll call the IRS at (800) 829-1040, you should be able to follow prompts to find the callback option. 

[VolvoGirl]

Have you seen this?  IRS Understanding your CP45 notice

Understanding Your CP45 Notice | Internal Revenue Service

There were a lot of adjustments for the Recovery Rebate Credit on line 30.  People were claiming the wrong amount for the 3rd Stimulus payment.  And also for the Advance Child Tax Credit on Line 28.  You have any amounts on those lines?  

[JulieS]

Before you ask the IRS to waive your "penalty" you need to understand why they changed your tax return. 

As VolvoGirl points out, it may not be a penalty at all. If you don't want to call the IRS, you can call the Audit Support Center and an agent will help you understand the letter that you received. Click here to get started. 

[mblatz01]

Oops...my apologies.  I thought I had updated thread with that information already but I guess not.  I did call IRS 1st week of March and spoke to someone.  The explanation was that an electronic estimated payment I had made had been rejected by my bank, and that the penalty/fee for that was, somehow, exactly $400.

So I'd like to argue my point/case with IRS for a refund or credit of that amount, but I have no idea who to contact or where to mail directly.  The agent on the other end of the phone number I called from the very vague letter (CP45) I received was not able to address that request, and the mailing address on the letter is their most general one for the IRS center in Austin TX, i.e. the one where everyone mails their return to if needed.  I just am not clear who or how best to contact at this point.

Alternatively, someone out here might say, with the benefit of experience, "Don't bother...they never relent, and people only prevail in stuff like this only with the help of a tax attorney", or some such thing.

[mblatz01]

Thanks...per my just posted reply, this $400 was a penalty/fee for a rejected electronic payment.  Sorry for the confusion.