Understanding the IRS Wage and Withholding Review

When the IRS issues a CP05 Notice, most taxpayers make the same hopeful assumption:
“I’ll call the IRS and explain the situation and they’ll release my refund early.”

Unfortunately, that is not how CP05 works.
Once this notice is sent, the IRS has legally placed your return into a 60-day mandatory review process, and the refund is locked for the full duration of that period.

This is a non-negotiable delay.

What the CP05 Notice Actually Means

The CP05 is triggered when the IRS must verify income-related data, including:

• your reported wages
• your withholding amounts
• your tax credits
• employer-reported income
• possible discrepancies in W-2 or 1099 forms

In simple terms:

The IRS is confirming that the money you claimed as withheld actually exists and was truly reported by employers and payroll systems.

Until that verification is completed, your refund will not be issued.

The 60-Day Clock: When It Starts and How It Works

The 60-day period begins on the date listed on the CP05 notice, not the date you receive it in the mail.

During this time:

• the IRS will not release your refund
• no one can override the hold
• calling the IRS will not accelerate processing
• transcripts will not show 846 (refund issued)
• WMR will remain stagnant or show “being processed”

This waiting period is built into IRS procedures.

Common Reasons CP05 Notices Are Sent

A CP05 typically appears when something triggers additional scrutiny, such as:

• wages reported seem unusually high or low
• withholding claimed exceeds typical ratios
• employer filings are delayed or mismatched
• credits like EITC or ACTC appear unusually large
• manual review was triggered by data irregularities

It does not automatically mean fraud or wrongdoing — it often means the IRS simply cannot reconcile your reported numbers with the employer data on file.

What You Should Do After Receiving CP05

Most CP05 notices will explicitly state:

“You do not need to take any action at this time.”

That means:

• do not send documents unless requested
• do not re-file your return
• do not submit an amended return
• do not panic

However:

If you already know your employer filed incorrect W-2 data, or you suspect identity issues, you may proactively prepare documentation like:

• copies of W-2 forms
• pay stubs
• employer payroll statements
• withholding records

You may also later receive a follow-up request that requires documentation — but the initial CP05 does not.

What Happens at the End of the 60-Day Hold

One of two outcomes occurs:

1. Your refund is released
   You will eventually see:

• TC 570 → TC 571 or
• TC 570 → TC 846
  on your transcript.

2. The IRS extends the review
   This often comes in the form of a:

• CP05A
• CP05B
• or another additional review notification

This suggests the IRS needs more documentation or clarification.

The Emotional Reality: The CP05 Test of Patience

Many taxpayers grow anxious, especially when:

• bills are due
• refunds are large
• WMR does not change
• calling IRS agents yields no new information

But once a CP05 has been issued, the hold is automatic and uniform.

Calling the IRS cannot shorten the delay.

If you receive a CP05 Notice, understand:

• your refund will be held for at least 60 days
• the IRS is validating wage and withholding data
• the delay is mandatory and cannot be circumvented
• the process will run its course

There is no shortcut once CP05 is triggered.