The CP39 will include instructions on how to contest the application of the refund, typically by proving that the past-due balance was paid or was not owed.
Additional aspects of the CP39 Notice:
- Offset Program: This notice is part of the IRS’s refund offset program, which is designed to collect unpaid taxes or other government debts (such as child support) before issuing refunds. In most cases, taxpayers cannot prevent the IRS from applying their refund to past debts unless they have already taken steps to resolve the outstanding balance.
- Further Liabilities: If the refund did not fully cover the previous tax debt, the CP39 will indicate the remaining balance due. Taxpayers are encouraged to settle the remaining amount as soon as possible to avoid further penalties and interest.
- Notification of Applied Refund: The IRS may continue applying future refunds to remaining tax debts until the balance is fully paid. The CP39 Notice is the taxpayer’s opportunity to understand how their refund was used and what actions they need to take moving forward.
Taxpayers who receive the CP39 Notice should review it carefully and address any remaining balances promptly to avoid additional penalties.