CP39 Notice: Refund Applied to Past Due Taxes

The CP39 Notice is sent by the IRS to inform taxpayers that their refund has been applied to unpaid taxes from a previous year. This means that instead of receiving the refund as expected, the IRS has used it to cover an outstanding tax liability.

Key details of the CP39 Notice:

• Refund Applied to Past Debt: The notice explains that the taxpayer’s refund from the current tax year was applied to a balance due from a previous tax year. The IRS uses refunds to offset any unpaid tax liabilities before issuing refunds to taxpayers.
• Balance After Application: If the refund fully covers the prior year’s debt, the taxpayer may not owe anything further. However, if the refund only partially covers the debt, the notice will include the remaining balance that still needs to be paid.
• Future Refunds: If the taxpayer continues to have unpaid tax debts, future refunds may also be applied to these debts until the full amount is paid off. The CP39 provides information on how to settle any remaining balance.
• Dispute Process: If the taxpayer believes the application of the refund was incorrect, the notice provides instructions for disputing the offset. Taxpayers may need to provide documentation proving that the prior year’s debt was already paid or that the refund should not have been applied.

The CP39 Notice is important for taxpayers to review, as it affects their expected refund and applies it toward resolving unpaid tax debts.