Self-employed taxpayers, freelancers, and anyone who makes quarterly estimated tax payments are the most likely to receive a CP23. It arrives when the IRS’s records of your estimated payments don’t match what you reported on your return — and that discrepancy results in either a balance due or a reduced refund.
What the CP23 means
The CP23 identifies a difference between the estimated tax payments the IRS has on record for your account and the payments you claimed on your return. This can happen for several reasons — a payment was sent but not processed correctly, a payment was applied to the wrong tax year, or you reported payments that the IRS doesn’t have a record of receiving.
The result is typically a balance due or a smaller refund than expected.
What to do
Pull your records of every estimated payment you made during the year — cancelled checks, bank statements, or EFTPS payment confirmations. Compare them against what the IRS shows in the notice.
If you made a payment that the IRS didn’t credit, respond in writing with proof of that payment — the date, amount, and confirmation number if available. Misapplied payments are more common than most people realize and are usually corrected without much difficulty once you provide documentation.
If the IRS records are accurate and you overclaimed payments on your return, pay the resulting balance or arrange payment before the deadline.
Frequently asked questions
Can an estimated payment be applied to the wrong year? Yes, and it happens regularly. If you made a payment in January intended for the prior year, the IRS may have applied it to the current year instead. Your EFTPS account history shows exactly how each payment was applied.
What if I can’t find records of a payment? Request a Tax Account Transcript from your IRS online account. It shows every payment credited to your account by date and amount, which makes it easy to identify missing or misapplied entries.