Receiving a letter from the IRS is stressful, especially when it means your refund is being reduced. Notice CP79 means the agency reviewed your return and decided that you do not qualify for one or more tax credits you claimed. This could affect your refund or even create a new balance due.
The notice doesn’t automatically mean you did something wrong, but it’s a sign the IRS questioned your eligibility for certain credits—often the Earned Income Tax Credit, Child Tax Credit, or certain education credits. Understanding what this notice means and how to respond to a credit denial can help you avoid more significant problems later. If you’ve received this notice and you want to discuss your concerns with a tax professional, call Wiggam Law at (404) 233-9800.
Key Takeaways
- Notice CP79 means the IRS denied one or more tax credits on your return.
- It’s often triggered by an IRS review or correspondence audit.
- If a denied credit increased your refund, you may now owe money back.
- You can dispute the denial or provide documentation to prove eligibility.
- Form 8862 may be required to claim the credit again in a future year.
What Is the IRS CP79 Notice?
Notice CP79 is how the IRS tells you that one or more tax credits on your return didn’t pass review. In short, they’re denying a credit you claimed.
This notice usually follows an IRS review or correspondence audit, which is a mail-based check of details like income, dependents, or filing status. The goal is to confirm that you actually qualified for any refundable credits you claimed.
If the IRS decides you don’t meet the rules, they’ll adjust your return and send Notice CP79 explaining which credit was denied and how that change affects your refund or balance due.
It’s not a full audit, but it’s a warning that something on your return didn’t add up.
Am I Being Audited?
Not exactly. Notice CP79 indicates that the IRS has reviewed part of your return, but it’s not the same as a full audit.
The agency often takes a closer look at returns that claim refundable credits like the Earned Income Tax Credit or Child Tax Credit. Because these credits can lead to larger refunds, the IRS verifies that each filer truly qualifies.
Usually, this review happens by mail. The IRS might compare your return to information from employers or schools. If something doesn’t line up—or if you’ve had a credit denied before—they can disallow it and issue Notice CP79.
So while it’s related to the audit process, CP79 is more of a limited credit review than a full audit.
If you’ve received a notice connected to an IRS review or correspondence audit, having tax audit representation can help you respond accurately and protect your rights.
Why Did I Receive This Notice?
There are a few reasons the IRS sends Notice CP79, most of which are tied to whether you actually qualified for a credit you claimed.
You might receive this notice if:
- The IRS decided you didn’t meet eligibility rules for a particular credit.
- You’ve had that credit denied in a prior year, which can trigger extra scrutiny.
- The IRS found errors or inconsistencies in your return, such as income or dependent information that doesn’t match their records.
- You went through a correspondence audit, and the documentation you sent didn’t fully support your claim.
- The IRS suspects a misrepresentation or mistake, intentional or not.
You normally don’t send documentation with your return, so this notice doesn’t mean you forgot something. It simply means the IRS reviewed your filing more closely and disagreed with part of it.
Some taxpayers first receive a CP75 Notice before a CP79, especially if the IRS requests verification for credits like the Earned Income Tax Credit.
Types of Tax Credits Commonly Denied Under CP79
The IRS CP79 notice usually involves refundable or partially refundable credits—the ones that can increase your refund or reduce what you owe.
Earned Income Tax Credit (EITC)
Supports working taxpayers with moderate incomes, but the rules are tight. Denials happen when income is too high, filing status doesn’t qualify, or a dependent doesn’t meet residency or relationship rules.
Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC)
Denied if a child doesn’t live with you long enough, isn’t your dependent, or lacks a valid Social Security number. Shared custody is a common source of disputes.
American Opportunity Tax Credit (AOTC)
Covers qualified college expenses for up to four years per student. Denied when the student has already used it the maximum number of times or when tuition records don’t match IRS data.
Premium Tax Credit (PTC)
If you purchased health insurance through the Marketplace, the IRS may deny this credit if there’s a mismatch between your return and Marketplace records.
Sometimes more than one credit is denied at once if the same issue—like dependents or income—affects several of them.
What Should You Expect After Receiving This Notice?
Once you get Notice CP79, the IRS has already adjusted your return. The notice lists which credit was denied and how that change affects your refund or balance.
If the credit reduced your refund, you may now owe money back. The IRS will include the new amount due and instructions for payment. You can still challenge the decision, but you must respond by the deadline on the notice.
The IRS may also impose a two-year ban for careless claims or a ten-year ban for fraud.
If you take no action, the IRS will consider the changes final and begin collecting any outstanding balance.
What If You Disagree with the Decision?
If you think the IRS got it wrong, you can challenge the decision. Start by reading Notice CP79 carefully to see why the credit was denied. The reason might be as simple as missing information or an outdated record.
Next, gather supporting documents—proof of residency, school records, or income statements. Follow the notice’s instructions to respond before the deadline.
You can ask the IRS to reconsider or, if needed, file an appeal. If your credit was denied in a past year and you now qualify, file Form 8862 to claim it again.
If the IRS flagged fraud or reckless disregard, you’ll need to wait until the ban period ends before using the form.
When the amount is large or the situation complex, consult a tax attorney. They can organize your records, meet deadlines, and ensure your response addresses what the IRS needs.
How Does Form 8862 Relate to CP79?
If the IRS denies a refundable credit, you often can’t claim it again until you file Form 8862. This form informs the IRS that you’ve resolved the issue and now meet the requirements.
It applies to credits like the EITC, CTC, ACTC, AOTC, and Credit for Other Dependents.
Attach Form 8862 when you qualify again. Once the IRS accepts it, you can claim the credit going forward.
You can’t use the form if you’re under a two- or ten-year ban for fraud or reckless disregard. You’ll have to wait until the ban expires.
What Happens If Your Credit Is Approved After Filing Form 8862?
If the IRS accepts your claim after you file Form 8862, you’ll receive a CP74 Notice. This letter confirms that you’re once again eligible to claim the credit that was previously denied.
Receiving Notice CP74 means the issue has been resolved—you no longer need to attach Form 8862 in future years unless the credit is denied again. From there, your credit eligibility returns to normal.
Keep the CP74 for your records. If the same question ever comes up, you’ll have proof that the IRS reviewed and approved your eligibility.
Can You Owe Money from This Notice?
Yes. If a denied credit increased your refund, the IRS will expect that money back. Notice CP79 explains how the change affects your balance and when payment is due.
The IRS may also charge interest and penalties on the disallowed amount until it’s repaid. If you can’t pay in full, you can request an installment agreement or payment plan through the IRS. Other relief options include an offer in compromise and currently not collectible status. You may also want to request penalty relief if you’ve incurred penalties due to the change.
Sometimes the change is small, but other times it can create a significant balance, especially if multiple credits were denied. Reviewing the notice and acting quickly helps reduce added costs and keeps your account in good standing.
If the IRS adds charges to your balance, you can learn more about IRS penalties and interest and how they’re calculated. If you can’t afford to pay your full balance, you might qualify for an Offer in Compromise to settle your tax debt for less than the total amount owed.
How to Prevent Future Credit Denials
The best way to avoid another CP79 notice is to make sure your credits are fully supported before you file. A few simple habits can go a long way:
- Know the rules. Each credit has its own eligibility guidelines. Review them carefully so you’re claiming only what you qualify for.
- Keep documentation. Hold onto records like W-2s, school bills, childcare receipts, and proof of residency for dependents.
- Be accurate with dependents. Make sure you’re not claiming a child or other dependent who doesn’t meet IRS rules for that specific credit.
- Check for past denials. If you’ve been denied before, you may need to attach Form 8862 to claim the credit again.
- Ask for help early. A tax professional can catch issues before you file and help you avoid mistakes that trigger reviews or bans.
Staying organized and informed helps you keep every credit you’re entitled to—without another unexpected letter from the IRS.
When to Seek Help From a Tax Lawyer
Getting an IRS CP79 notice can be stressful, but it doesn’t have to derail your finances. Understanding why your credit was denied and how to respond can help you fix the issue and prevent it from happening again.
If you’re unsure why the IRS denied your credit, or if you now owe money because of a disallowed refund, professional guidance can make a real difference.
At Wiggam Law, we help clients understand their IRS notices, respond correctly, and protect their eligibility for future credits. We can communicate with the IRS on your behalf and work towards a resolution that suits your specific situation.
Call (404) 233-9800 or schedule your consultation today to get personalized help with your IRS CP79 notice.
Form 8862 Frequently Asked Questions
What happens if I ignore CP79?
The IRS will treat the denial as final and may begin collecting any balance due, including penalties and interest. Ignoring the notice can also make it harder to dispute the decision later, since missed deadlines limit your appeal options.
Can I claim the denied credit in future years?
Yes, once you meet the eligibility rules again. You’ll usually need to file Form 8862 to show the IRS you now qualify for the credit. However, if the IRS imposed a temporary or long-term ban for fraud or reckless disregard, you’ll need to wait until that period ends before claiming the credit again.
Will this notice affect my next refund?
It might. If you still owe money from the denied credit, the IRS can apply part or all of your next refund to that balance. In some cases, repeated eligibility issues could also delay future refunds until the IRS completes another review.
How long do I have to dispute the denial?
Your Notice CP79 includes a specific deadline for responding, and it’s important not to miss it. Once that date passes, your right to appeal or request reconsideration becomes limited. Responding quickly helps keep all your options open and prevents extra penalties.
What is Form 8862, and when do I file it?
Form 8862 is used to reclaim certain credits—like the EITC or Child Tax Credit—after the IRS has denied them. You should only file it once you’re confident you meet all eligibility rules again. The form shows the IRS that you’ve corrected past issues and are now entitled to the credit.
What does IRS Notice CP74 mean?
Notice CP74 confirms that the IRS has reinstated your eligibility for a previously denied credit. It means your most recent claim was approved after you filed Form 8862. Keep this notice with your records in case you ever need to show proof of eligibility later.
Does this notice mean I committed tax fraud?
Not necessarily. Many denials stem from errors or missing information, not intentional wrongdoing.