What Is IRS Notice CP02?
IRS Notice CP02 is sent when the IRS applies a tax credit to your account instead of issuing it as a refund. The notice explains how the credit was used and shows how it affected your tax balance.
CP02 is informational. It does not indicate an error, audit, or enforcement action.
What Does a CP02 Notice Mean?
A CP02 notice means the IRS applied a credit from one tax year to:
- An unpaid tax balance from another year, or
- Another liability on your IRS account
Instead of sending the credit to you as a refund, the IRS used it to reduce an existing obligation.
Why Did You Receive a CP02 Notice?
You may receive a CP02 notice if:
- You were entitled to a credit on a tax return
- You had an outstanding federal tax balance
- The IRS applied the credit automatically
- No refund was issued because the credit was used internally
The IRS is authorized to apply credits without prior approval.
Is CP02 a Bill or a Collection Notice?
No. CP02 is not a bill, not a levy notice, and not a demand for payment.
It simply explains how a credit was applied and updates your account records.
What Is the Deadline to Respond to a CP02 Notice?
CP02 usually does not require a response unless you believe:
- The credit was applied incorrectly
- The amount shown is inaccurate
- The credit should not have been used
If you disagree, the notice provides instructions for contacting the IRS.
What Happens If You Ignore a CP02 Notice?
Ignoring CP02 itself does not cause penalties or enforcement. However:
- Any remaining balance may still be subject to collection
- Interest and penalties may continue on unpaid amounts
- Additional notices may follow if a balance remains
What Are Your Options After Receiving a CP02?
After receiving CP02, you may:
- Review the notice to confirm the credit application
- Pay any remaining balance, if shown
- Set up a payment plan if a balance remains
- Contact the IRS if the credit was misapplied
Which IRS Forms Are Related to a CP02 Notice?
Forms commonly associated with CP02 include:
- Form 1040 / 1040-SR – Individual income tax return
- Form 1040-X – Amended return if the credit amount is incorrect
- Form 843 – Request abatement of penalties or interest, if applicable
What IRS Notices Are Related to CP02?
Notices commonly related to CP02 include:
- CP49 – Refund applied to past-due taxes
- CP12 – Corrected return resulting in a refund
- CP11 – Corrected return resulting in a balance due
- CP21 – Account adjustment notice
When Should You Seek Help With a CP02 Notice?
You may want assistance if:
- You disagree with how the credit was applied
- Multiple tax years are involved
- The credit should have been refunded instead
- The remaining balance is difficult to resolve
Summary
IRS Notice CP02 explains that a tax credit was applied to your account instead of being issued as a refund. While it does not require action in most cases, reviewing the notice helps ensure the credit was applied correctly.
Scope Note
This page explains IRS Notice CP02 and general response options. It does not provide legal or tax advice.