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The IRS notice "CP 45" is sent to the taxpayer because the IRS was unable to apply the taxpayer's overpayment to the following year's taxes as requested on the return. This could be caused by an adjustment to the filed return or the IRS record of payments made did not match the payments claimed on the return. The notice could also be generated if the IRS offset the refund against other taxes owed or other debts outstanding which are legally collectible through the IRS offset program.
The IRS issues the CP45 Notice when there’s a discrepancy between the estimated tax payments reported on a tax return and the payments the IRS has on record. This notice notifies taxpayers of adjustments to their estimated tax payments, which can affect their tax liability or refund. Accurate reporting is critical to meeting obligations throughout the year, as outlined in the Internal Revenue Code Section 6654.
A common reason for this notice is the misapplication of estimated tax payments, such as applying a payment to the wrong tax year or processing errors within the IRS system. Taxpayers who make payments using methods like electronic funds transfer or checks may encounter issues if payments are not properly credited. In some cases, the notice might also be triggered by changes in filing status or income adjustments that affect estimated tax calculations. For instance, a significant increase in income during the year may require higher estimated payments to avoid penalties.
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