CP28A Notice

What Does the IRS CP28A Notice Actually Mean?

Okay, so you received a letter from the IRS, and it’s titled “CP28A Notice”. That might sound scary, but don’t panic! It simply means that the IRS has reviewed your tax return and made some changes. Usually, these changes involve adjustments to credits or payments you claimed. Let’s break down what this actually means and what you should do.

Background: Why Did You Get a CP28A Notice?

It helps to understand why the IRS sends these notices in the first place. Think of the IRS as a giant processing machine. Millions of tax returns come in every year. When they spot something that doesn’t quite match their records or the rules, they send out notices like the CP28A. These notices aren’t always because you made a mistake, they could be because they have different information than you do. For example, they may have received different income information.
These CP28A notices are specific to changes regarding specific items on your return, usually involving credits and payments. They’re different than other IRS notices. For example, a CP12 notice is used when the IRS has made a correction because they believe there was a mathematical error.

How IRS Notices Are Generated

The IRS doesn’t just randomly send out these notices. Here’s a simplified version of how it works:

• Tax Return Submission: You file your tax return (either paper or electronically).
• Data Entry & Matching: The IRS enters your return information into their system. They compare it against other data they receive from employers, banks, etc.
• Automated Checks: Their computer systems run various checks to look for potential discrepancies or errors.
• Notice Generation: If a discrepancy is found, a notice, such as the CP28A, is generated and sent to you.

How Does the CP28A Notice Work?

The CP28A notice has specific information, broken down into sections, that helps to explain the changes:

• Specific Identification: This notice will clearly state the tax year it’s about. It will also include your identifying information, like your name and social security number (or TIN). This helps ensure the notice goes to the right person.
• The Reason for the Change: The notice will detail the exact adjustment made to your tax return. It will explain what item was changed and why. Usually this involves a specific tax credit or payment. For example, it might say they’ve reduced the amount you claimed for the Earned Income Tax Credit because you don’t meet the qualifications, or they have adjusted the amount of a payment you sent in, possibly because of a calculation error.
• The Adjusted Amount: You’ll see the original amount you claimed and then the new, adjusted amount as determined by the IRS. This includes the exact dollar amount.
• Action Required (If any): The CP28A notice will tell you if you need to take any further action. You might owe more money, be due a refund, or no action might be needed.

Examples of CP28A Notice Scenarios

Let’s look at a few examples to make it clearer:

• Scenario 1: Earned Income Tax Credit (EITC) Adjustment: You claimed the EITC on your tax return, but the IRS determined you didn’t meet all the eligibility requirements (like income limits or having qualifying children). The CP28A would explain why you’re not eligible and reduce the amount of the EITC you received.
• Scenario 2: Incorrect Payment Amount: You sent in a payment with your tax return, but it wasn’t for the exact amount the IRS was expecting. The CP28A would show the amount they received and explain how that has impacted your total tax due.
• Scenario 3: Recovery Rebate Credit (RRC) Adjustment: You claimed the RRC (sometimes called the stimulus payment or Economic Impact Payment credit) but based on IRS records, they determine you received the full payment, so the credit is reduced.
• Scenario 4: Premium Tax Credit Adjustment: You received the Advanced Premium Tax Credit for your healthcare plan on the marketplace. However, at the end of the year you failed to complete the reconciliation form (8962) or reconcile that information with the marketplace, which resulted in an adjustment.

In each scenario, the notice would detail the specific adjustment made and the reason for it.

Who Is Affected by the CP28A Notice?

The CP28A notice is intended for any taxpayer who filed a tax return where the IRS adjusted a tax credit or payment. This could be any individual filer, married couples filing jointly, or even those filing as head of household. It’s important to note the notice applies to the tax filer, not anyone else. Because the CP28A notice is specifically focused on credits and payments, it does not usually affect a business entity tax return.

Related Concepts and Terms

Understanding these terms will give you a better understanding of the CP28A:

• Tax Credits: These directly reduce your tax liability. The Earned Income Tax Credit (EITC), the Child Tax Credit, and the Premium Tax Credit are a few examples.
• Tax Payments: Payments that go towards what you owe in taxes. This includes estimated tax payments and tax payments made at the time of filing.
• IRS Notices: These are communications from the IRS about your tax situation. They are not all created equal; a CP28A relates to credit or payment adjustments. CP12 notices are for mathematical errors. A CP14 notice is to indicate a tax balance due. Understanding the different notice codes is helpful.
• Tax Return: The form you file with the IRS to report your income and calculate your taxes. This is where all the information that can be changed in a CP28A is found.
• Tax Adjustment: When the IRS changes something on your return from what you claimed. They use documentation to support their reason for adjustment. This is what causes you to receive a CP28A notice.

Tips for Handling a CP28A Notice

Here’s how to handle a CP28A notice effectively:

1. Read It Carefully: Don’t skim! Read every detail of the notice. Understand the specific changes made by the IRS and why.
2. Compare to Your Return: Get out your original tax return and compare it to the IRS adjustments. Look at the tax forms they are referencing in the notice.
3. Gather Documentation: If you disagree with the IRS, collect any documents to support your original claims (e.g. pay stubs, receipts, etc.).
4. Contact the IRS: If you have any questions or need clarification, contact the IRS using the number provided in the notice. You can also visit IRS.gov for more help. Be prepared for long wait times.
5. Respond Promptly: If you owe money, pay it on time to avoid interest and penalties. If you disagree, respond to the IRS with your documentation and disagreement within the timeframes set forth in the notice.
6. Keep Records: Always save a copy of your tax return and all IRS notices you receive.

Common Mistakes & Misconceptions about the CP28A Notice

Let’s clear up some confusion:

• It’s not necessarily an accusation: Receiving a CP28A notice doesn’t mean you intentionally did something wrong. It could just be a difference in the information the IRS has compared to yours.
• Ignoring it is a bad idea: Ignoring a CP28A notice will not make it go away. It could lead to further penalties and interest from the IRS. Take action when required.
• It doesn’t always mean you owe more: Sometimes, the IRS might find an error that results in a bigger refund for you. This rarely occurs, but it’s not impossible.
• You don’t always need to respond: If you agree with the IRS’s findings and the notice states you owe more, paying the amount due is enough. You only need to respond if you disagree with the adjustment, or if the notice specifically requests additional information.
• It’s not a “tax audit”: A CP28A is different from a full tax audit. An audit is a more in-depth review of your tax return and financial records.

The Bottom Line

The CP28A notice can seem intimidating, but it’s essentially just the IRS letting you know that they made changes to your tax return, often concerning tax credits or payments you claimed. By understanding what the notice means, carefully reviewing it, and acting promptly, you can resolve the issue and avoid further complications. The key is to stay calm, be thorough, and don’t hesitate to seek help if needed.