Notice CP42

IRS Notice CP42 begins with, "Your [year] Form 1040 overpayment was applied to tax you owe". The IRS uses Notice CP42 to inform you they have taken your refund to be applied to your spouse's or ex-spouse's other tax debt. This can be very irritating if you expected the tax to be paid. However, the underlying tax itself is often wrong. You may be able to repair the old and new taxes to get the refunds you're due!

Respond to Notice CP42

If your refund was taken to pay an ex-spouse's tax debt, your tactic will depend on how cooperative is your ex-spouse. If there is cooperation you can see if the taxes can be adjusted by calling the IRS at 1-800-829-1040 & ordering your Account Transcripts & your Wage & Income Transcripts for both of you.

This will give you all the information available for both of the accounts. Then, you can determine the date of assessment & statute of limitations as well as all the 3rd party documents sent to the IRS on your behalf. From there, you can test if it is wise to adjust the taxes. If there is any uncertainty, call for an appointment so we can create an Action Plan for your specific situation.

Procedure

If you don't cooperate or the amount cannot or should not be adjusted you'll each have to withstand IRS Collection, at least temporarily. See Collection Prep Steps. The various options to be explored have good & bad consequences to you. Please be very careful to initiate a plan that will succeed. You can pursue Innocent Spouse relief, Injured Spouse relief (as applicable) or you can work out the problem privately or through the state courts.

But, each avenue of relief carries a burden. At least temporarily, you should complete a new Form W-4 to adjust your withholding from your employer. This will ensure that no further refunds are taken.

Your problem can be resolved in several different ways, depending on the facts. Please follow the IRS Notice CP-42 Prep Steps for further information, forms & instructions. Please see Mr. Hopkins in Colorado Springs or Pueblo before proceeding!

Various IRS Notices CP42: