What to Do If You Receive an IRS CP12

Introduction
Receiving an IRS CP12 notice can be unnerving, but it’s a routine IRS communication: the agency is telling you it made a change to your return and is showing the revised refund or balance due. Most CP12 notices result from information the IRS received from third parties (W-2s, 1099s, etc.) that doesn’t match what you filed. This article walks through what a CP12 typically contains, immediate actions to take, how to dispute errors, payment options, and when to get professional help.

Why you might get a CP12 notice

• Third‑party data mismatch: Employers and payers file W-2s, 1099s and other information returns. If those totals don’t match your return, the IRS can adjust your return.
• Missing or incorrect forms: A missing Schedule or corrected 1099/W‑2 can trigger an adjustment.
• Credit eligibility changes: The IRS may disallow or change credits (for example, education or dependent-related credits) based on its records.
• IRS processing corrections: Occasionally a CP12 follows a math or processing correction that changes your refund or tax owed.

What a CP12 notice usually includes
A CP12 notice is typically short and shows: the reason for the change, the line(s) on your return that were adjusted, the corrected refund or balance, interest and penalties (if any), and instructions on how to respond. It also gives a deadline and a mailing address or phone number to contact the IRS.

First steps: Read, compare, and verify
1) Read the notice completely. Identify the changed items and the IRS explanation. The notice usually identifies which form/line was corrected.
2) Compare it with your filed return and any supporting documents (W‑2s, 1099s, Form 8862 if you claimed certain credits, etc.).
3) Check the dates and deadlines on the notice. Many responses or payments must arrive by a specific date to avoid added interest and penalties.

Agreeing with the IRS adjustment
If, after reviewing your return and records, you determine the IRS is correct:

• No further action may be needed to accept the adjustment. However, if the CP12 increases the amount you owe, you must pay by the deadline shown to limit interest and penalties.
• Payment options include: IRS Direct Pay (pay directly from a bank account), debit/credit card payments through IRS-approved processors, or an electronic funds withdrawal if you file electronically. If you cannot pay in full, you can request an installment agreement online using the IRS Online Payment Agreement tool or complete Form 9465, Installment Agreement Request. For taxpayer hardship, consider requesting Currently Not Collectible status — a tax professional can help with that request.
• Interest and penalties: Interest accrues from the original due date of the return. The notice will list any assessed penalties. Interest and penalty rates change periodically; expect interest on unpaid amounts until paid.

Disagreeing with the IRS adjustment (how to dispute)
If you believe the IRS made an error, you have the right to dispute it. Follow these steps:
1) Gather documentation: corrected W‑2s or 1099s from the payer, bank statements, Form 1098 (mortgage interest), receipts for education costs, custody documents for dependent claims, or any other proof that supports your original filing.
2) Use the instructions on the CP12: the notice includes where to send a written response and which documents to include. Your response should clearly state why you disagree, reference the notice number and tax year, and include copies (not originals) of supporting documents.
3) Mail your response to the address on the notice. Send via certified mail with return receipt if you want delivery proof. Keep copies of everything you send.
4) If the paperwork shows the IRS record is wrong because the payer issued an incorrect form, contact the payer and ask them to file a corrected W‑2/1099 with the IRS and provide you a copy. If they submit a corrected form, send that correction to the IRS with your response.

When to file Form 1040‑X (Amended Return)
If your review finds that your original return itself contained an omission or error (for example, you later receive a corrected 1099 that you should have included), you may need to file Form 1040‑X, Amended U.S. Individual Income Tax Return. In many cases, responding to the CP12 with documentation is the faster first move; filing Form 1040‑X is appropriate when you must change your return beyond what the IRS’s notice addresses. See the IRS page about Form 1040‑X for filing windows and instructions: https://www.irs.gov/forms-pubs/about-form-1040x

Timing and statute of limitations
The IRS generally has three years from the date you filed the return (or the return’s due date, whichever is later) to assess additional tax. Significant omissions (more than 25% of gross income) can extend that to six years. Fraud has no time limit. If you receive a CP12 late in the assessment window, respond promptly — the same rules that allow the IRS to assess also give you deadlines for contesting adjustments. For guidance on assessment and refund periods, see the IRS page “Understanding Your IRS Notice or Letter”: https://www.irs.gov/individuals/understanding-your-irs-notice-or-letter

Common mistakes to avoid

• Ignoring the notice. That allows interest and penalties to grow and can trigger collections.
• Missing the response deadline. Even if you dispute the change, respond before the deadline to preserve your rights.
• Sending originals. The IRS requests copies of documents; keep originals in your files.
• Assuming the IRS is always right. Systems and data-entry errors happen. Verify before accepting.

Documentation checklist (what to send when disputing)

• Copy of the CP12 notice, front and back
• A clear cover letter stating your dispute, tax year, and notice number
• Copies of supporting documents: corrected W‑2/1099, bank statements, receipts, canceled checks, court orders for dependents, academic transcripts or Form 1098‑T for education credits
• If applicable, Form 8821 or a power of attorney (Form 2848) if you authorize a tax professional to represent you

When to get professional help
Consider a CPA, enrolled agent (EA), or tax attorney if:

• The dollar amounts are large;
• The CP12 leads to complex follow‑up (e.g., multiple years or related audits);
• You receive subsequent notices or a proposed levy; or
• You need help negotiating an installment agreement or an offer in compromise.
  A tax pro can also represent you directly to the IRS using Form 2848.

Example scenario (brief)
You file a regular 2024 return reporting $45,000 of wages and get a CP12 showing the IRS matched a W‑2 that reported $48,000. The CP12 explains the IRS increased your wages by $3,000 and adjusted the refund downward. If you agree, pay the additional tax shown or set up a payment plan. If you think the payer issued the W‑2 in error, ask the employer for a corrected W‑2 and send that correction with a short dispute letter to the address on the CP12.

Related FinHelp guides

• For quick explanation of math and adjustment notices: “What is a Math Error Notice (CP11/CP12)?” — https://finhelp.io/glossary/what-is-a-math-error-notice-cp11-cp12/
• For other CP12 scenarios and wording examples: “CP12 Notice: Changes to Your Tax Return — Refund or Balance Due” — https://finhelp.io/glossary/cp12-notice-changes-to-your-tax-return-refund-or-balance-due/
• If you need to dispute a bill formally: “How to Resolve a Disputed Tax Bill with the IRS” — https://finhelp.io/glossary/how-to-resolve-a-disputed-tax-bill-with-the-irs/

Useful external resources

• IRS: Understanding Your IRS Notice or Letter — https://www.irs.gov/individuals/understanding-your-irs-notice-or-letter
• IRS: About Form 1040‑X (Amended U.S. Individual Income Tax Return) — https://www.irs.gov/forms-pubs/about-form-1040x

Bottom line
A CP12 notice is usually straightforward: the IRS adjusted your return and is telling you the result. Read the notice carefully, verify the change against your records, and respond by the date on the notice — either by paying, accepting the adjustment, or supplying documentation to dispute it. If you’re unsure, a qualified tax professional can help protect your rights and negotiate payment options.