CP25 Notice: Refund Adjustment Due to Estimated Tax Payments

The CP25 Notice is issued by the IRS when a taxpayer’s refund is adjusted due to discrepancies in the estimated tax payments reported on their return. This typically occurs when the IRS has different records of the estimated payments than what was reported by the taxpayer, resulting in a corrected refund amount.

What the CP25 Notice includes:

• Adjustment Explanation: The notice will provide a detailed explanation of why the refund was adjusted, showing the differences between the estimated tax payments reported on the return and those recorded by the IRS. If the IRS found that the taxpayer overpaid or underpaid their estimated taxes, the refund will be recalculated accordingly.
• Revised Refund Amount: The CP25 will clearly state the revised refund amount after adjusting for the estimated tax payments. This revised refund may be higher or lower than originally expected.
• Dispute Process: Taxpayers who believe the IRS made a mistake in calculating their estimated tax payments can submit additional documentation, such as payment receipts or bank statements, to dispute the adjustment. The notice will include instructions on how to appeal.
• Payment Options: If the refund adjustment results in a balance due, the CP25 will outline payment options, including online payments or installment agreements.

The CP25 Notice is essential for ensuring that estimated tax payments are correctly applied, and any necessary corrections to the refund are made.