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  • Refundtalk

    The IRS uses the series of Notices CP75 (CP75A, CP75C & CP75D) for letter audits concerning the Earned Income Credit, The Head of Household filing status, or Dependency Exemptions. They often include Forms 886-H-HOH, 886-H-DEP, or 886-H-EIC with questions for you to answer and documents to obtain or they can attach a separate Form 4564 or Form 886A. This conflict occurs with ex-spouses, grandparents, foster parents and other caregivers who claim the dependency exemption (and other benefits). Often, more than one person has claimed the exemption and there is a dispute about who is entitled to the deduction.

    What to do:

    In most cases, you must 1st verify that you are entitled to claim the dependent & the corresponding various benefits. The IRS asks for a lot of documentation showing your support of the dependent, which is a very tedious chore.

    This is not an audit or a bill but the issues must be proven in exactly the same way. You only have 60 days to respond through the IRS administrative process. The information requested by the IRS is very personal & they often ask for far more than necessary to prove the case or to which they are entitled. Plus, their guidance is practically worthless.

    But, you have a duty to prove your case. The IRS will ask where you lived, with whom, how much were contributions to the household & your lifestyle. You must get housing, school, medical, court, agency, & government records to verify your claims. These documents must be prepared in the manner required or the IRS will reject them.

    Also, the IRS will not review files that are unorganized & they will likely impose “negligent record-keeping” or “accuracy-related” penalties for poorly presented records.

    Steps for IRS Audits


    Self-Prepare: If you want to save money & self-prepare, the most helpful & least expensive way is for you to arrange and prepare your files but get attorney guidance.

    It makes more sense for you to organize your records since you understand your business & can get items you need quickly. When you’re ready, get legal advice.

    Lost Documents: Some people may fear an audit because they didn’t keep their records or their records are lost or unavailable. However, unless you used only cash, bank & credit card records can be re-created. And, even if you used a lot of cash, we can get affidavits or use industry standards to get a reasonably negotiated figure.

    Re-certification: Even if the IRS denies your claims, you can continue to pursue your case in Appeals or Tax Court. Eventually, if you win, they will send you a Notice CP74 stating you are re-certified for the Earned Income Credit and can freely claim the credit in future years.

    Use the thread below to discuss IRS CP75’s. Connect with others that have received a CP75 and keep us updated on what you find out!

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