Glossary

CP254 Notice

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The CP254 notice is sent by the IRS to inform taxpayers that the agency has corrected an error on their account and has applied an overpayment credit to their balance. This notice provides details about the correction and how the credit will be used toward future tax obligations.

Key details in CP254:

It explains the nature of the error and how the IRS applied the overpayment to the taxpayer’s account.
The taxpayer may request that the credit be refunded or applied toward next year’s estimated taxes.
If the taxpayer believes the correction is incorrect, they can contact the IRS to dispute the adjustment.

Taxpayers receiving CP254 should review the notice carefully and decide whether they want the overpayment refunded or applied to future taxes.

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