IRS Notice CP60: What It Is and How We Handled It For Our Client
Yesterday, our client received a CP60 notice from the IRS. It was for a $107 adjustment to her 2014 tax year plus $195.34 of interest charges.
At the top of her notice was a billing summary that read as follows:
| Billing Summary | |
|---|---|
| Balance on account before adjustment | $0.00 |
| Misapplied payments | $107.00 |
| Interest charges | $195.34 |
| Amount due by April 24, 2023 | $302.34 |
Now, this notice was very interesting because we had recently set her up with an installment agreement for tax years 2014-2017 and 2021.
So why — nearly a decade after the tax year in question — was the IRS adjusting her account for tax year 2014?
I wanted to get the full story here, so I called the IRS Automated Collection System (ACS) to see if I could get an answer.
But first, let’s talk about what IRS Notice CP60 is.
Table of Contents
What Is IRS Notice CP60?
IRS Notice CP60 is a notice that the IRS sends to a taxpayer to inform them that a credit the IRS previously applied to their account had actually been applied in error and has therefore been removed.
Here’s why the IRS sends Notice CP60:
- The IRS posted a payment to your account in error.
- The IRS discovered the error and reversed the credit.
- The IRS then sends you CP60 to notify you of the reversal and inform you that your account now shows a balance due or an additional balance due if it had a balance before.
CP60 Due to Installment Agreement Setup Fee
Now, in our client’s case, the IRS erroneously applied our client’s $107 installment agreement setup fee — which shouldn’t have been applied to any tax year in particular — to her 2014 tax year’s balance.
So for a few months, our client’s 2014 tax year balance was improperly reduced by $107.
However, the IRS eventually caught this error and adjusted her 2014 tax year’s account balance by this mistakenly applied $107, and this adjustment is what triggered the CP60 Notice.
Now, upon receiving this CP60 Notice, the client was quite confused; we had just gotten her into a direct-debit installment agreement, so she was wondering if she had to pay the amount in this notice on top of her monthly installment agreement.
How We Dealt With Our Client’s CP60 Notice
I called ACS about this and spoke with Mr. Daniel (ID 1003396938).
Mr. Daniel told me that it appears to him that the taxpayer’s DDIA is not in jeopardy as a result of this notice, that the taxpayer does not need to pay the amount stated in the notice by the due date in the notice, and that the taxpayer’s regular installment agreement payments will pay down this balance anyway.
Effectively, according to Mr. Daniel, our client could ignore this notice!
Of course, this may not be true for your CP60 Notice; always do your research to determine what triggered this notice filing and what, if anything, you need to do about it!
Author:
Logan Allec, CPA, Founder and Owner
Logan Allec has been serving taxpayers as a CPA for over 14 years. After leaving his role at a "Big 4" firm, he started Choice Tax Relief to help everyday Americans who have found themselves behind on their taxes. He also educates thousands of people daily about tax relief on his YouTube channel. In addition to his CPA license, Logan also has a Master's Degree in Taxation from the University of Southern California (USC). He lives with his wife and children in the Los Angeles area. Learn more about Logan here.
