Understanding the 60-day refund freeze caused by income verification discrepancies

Nothing scares taxpayers quite like receiving a CP05-L Notice. This letter means one thing:
the IRS is not convinced that the income or withholding amounts you claimed on your return are accurate or properly matched to federal records.

This triggers an immediate refund freeze — often for 60 days or longer.

Let’s break down exactly what this notice means, why you received it, and most importantly — how to survive this delay and get your refund released.

What Exactly Is a CP05-L?

The CP05-L is an IRS income verification and withholding confirmation notice.

It appears when the IRS cannot match your reported tax documents against:

• Social Security Administration wage records for W-2s
• Employer-submitted W-2s
• Payer-submitted 1099s
• Withholding records sent to IRS databases
• Prior-year income patterns
• Reported employer IDs and EIN numbers

The IRS essentially says:
“We see a discrepancy — and we’re not clearing your refund until it’s resolved.”

Why This Notice Was Sent to You

Common triggers include:

1. Your employer hasn’t submitted the W-2 yet

This happens frequently in early February.

Taxpayers file early — but some employers do not upload wage data until late January or mid-February.

2. Employer-reported wages differ from what you reported

Even a tiny difference — $50 or $100 — can trigger verification.

3. Withholding amounts don’t match IRS data

If your W-2 shows $6,400 withheld but employer-submitted data shows $5,950 — that’s a red flag.

4. Gig workers / contractors with 1099 wages

1099-NEC income is often reported late, or inconsistently, or with naming/ID errors.

5. Multiple employers with mismatched payroll reporting

Especially common for:

• restaurant workers
• construction workers
• seasonal employees
• retail workers
• tipped workers

6. Suspicion of fabricated W-2s

Yes — people fake them.
And yes — the IRS knows.

Your return may have been flagged by automated systems if it statistically resembles known fraud patterns.

The Automatic Refund Freeze

The CP05-L triggers:
TC 570 — Refund Hold

Meaning:
Your refund is legally frozen until verification completes.

This hold lasts a minimum of:

60 days from the notice date

And often extends to:

90-120 days
if additional confirmation is needed.

What the IRS Is Checking During This Period

IRS analysts verify:

• employer wage submissions
• payroll withholding
• SSN match validity
• name/identity consistency
• EIN accuracy
• AGI comparability
• historical income totals
• dependent claims

They are not checking your math.
They are checking your proof.

What You Need to Do (and NOT Do)

DO:

• Wait for IRS to complete the verification
• Respond if they request supporting documents
• Use the IRS Online Account to check notices
• Contact your employer for W-2 correction if needed

DO NOT:

• File a second return
• Amend anything yet
• Call IRS every day
• Panic when WMR stops updating

This is a verification freeze — not an accusation of fraud and not a penalty.

How to Check the Status During the Hold

Inside your IRS Online Account or transcript, you may see:

• TC 570 — Refund Hold
• TC 971 — Notice Issued (CP05-L)
• possibly later:
• TC 571 — Hold Released
• TC 846 — Refund Issued

TC 571 is the one you’re hoping for — it means:
the income/withholding has been verified and the refund is moving forward.

Real-World Examples

Example A

Employee files Jan 31.
Employer files W-2 on Feb 7.
IRS mismatch → CP05-L sent Feb 12
Verification clears Mar 20
Refund issued Mar 24

Total delay: ~6 weeks

Example B

Employee dispute — employer reported wrong numbers.
Requires corrected W-2 (W-2C).
Refund held until April.

Total delay: 2-3 months

Example C

Gig worker with multiple 1099 forms.
One payer submitted late.
IRS finally reconciles in mid-March.

Refund released: Apr 1

The Most Important Advice

If your reported income and withholding are correct — you will eventually get your refund.

This is not a denial.
This is not a rejection.
This is not an audit.

This is a verification lock — and it simply takes time.

When to Call the IRS

If the notice says “do not contact us for 60 days”, do not call before that time.

You may call after:

• 60 days from notice date
• if no resolution has posted
• if additional notices appear

If 120 days pass with no movement, contacting the Taxpayer Advocate Service may be appropriate.

Receiving a CP05-L Notice means:

• the IRS has a data mismatch
• your refund is paused
• a 60-day wait is standard
• verification is underway
• the refund will release when income and withholding are confirmed

This is a bureaucratic delay — not a punishment and not a permanent problem.

If your documents are real and your numbers are correct, the system will eventually validate and release your money.