IRS Letter CP128
Why are you receiving this letter?
You received IRS letter CP128 because, although you were due a refund, the IRS applied your refund toward a previous period’s tax balance. You are likely on an installment agreement to pay back outstanding payroll taxes. The IRS applied your most recent payment to a tax period with no balance. The IRS then reapplied the payment to tax period with taxes owed. It can be confusing on how the IRS applies payments.
- No further action is required if you have an arrangement with the IRS.
- You can pay in full online at www.irs.gov/payment.
- Your tax balance is less than $25,000.
- You don’t have unfiled tax returns.
- You are unable to pay back the taxes in full.
- You would like to discuss this with someone not working for the IRS to understand what is going on and the options you have.
- Your tax balance is greater than $25,000.
- You have unfiled tax returns.
- You are unable to pay back the taxes in full.
- You would like to negotiate down the tax balances.
What you should do?
Read notice CP128 carefully. It will explain which tax periods the IRS used your refund to pay. Review the date and amount of payments made. Contact the IRS if you do not agree with the balances or if there are missing payments.
What can you expect next?
If using the refund to pay the tax balance did not full pay the IRS, then, letter CP128 is considered a tax bill. The IRS asks that you pay the balance due in full. You do have options to setup arrangements with the IRS if you are unable to pay the balance due in full. It is in your best interest to pay as quickly as possible to minimize penalties and interest.