Letter 105C: IRS Claims Disallowed - Next Steps

Understanding IRS Letter 105C

Receiving an IRS Letter 105C can be concerning. This letter indicates that a claim you submitted has been disallowed. It is crucial to understand why you received this letter and what steps you should take next.

What Is IRS Letter 105C?

IRS Letter 105C is sent to taxpayers when the IRS disallows a claim made on a tax return. The letter outlines the reason for the disallowance, which could be due to incomplete information, ineligibility for the deduction or credit claimed, or errors in calculation.

Reasons for Disallowance

• Incomplete Documentation: The IRS may require additional documentation to support your claim.
• Ineligibility: You may not meet the criteria for the credit or deduction claimed.
• Errors in Calculation: Mathematical errors or incorrect entries can lead to disallowance.

Steps to Take After Receiving Letter 105C

After understanding the reason for disallowance, here are the steps you should consider:

Step 1: Review the Letter Carefully

Examine the letter in detail. The IRS will provide an explanation of why your claim was disallowed, citing specific errors or missing documentation. Pay close attention to these details as they guide your next steps.

Step 2: Gather Supporting Documents

If documents are missing, collect the necessary paperwork that supports your claim. This may include receipts, W-2 forms, or letters from third parties.

Step 3: Contact the IRS If Needed

If the information in the letter is unclear, consider contacting the IRS directly. Use the contact information provided in the letter. Be prepared to provide your taxpayer identification number and any other relevant details.

Step 4: Prepare a Written Response

Draft a response letter if you believe your claim is valid. Include your supporting documents and explain why the original claim is correct. Reference specific tax code sections when possible (e.g., IRC Section 162 concerning trade or business expenses).

Step 5: Consider Professional Help

If handling this issue on your own is overwhelming, consider hiring a tax professional who can represent you and ensure all technical details are adequately addressed.

Filing an Appeal with the IRS

If your response does not resolve the issue, or if you disagree with the IRS's decision, you have the right to appeal. File a formal appeal using IRS Form 12203, Request for Appeals Review, or follow instructions provided in the letter for dispute resolution.

Appeal Tips

• Timeliness: File your appeal within the timeframe specified in the letter, typically 30 days.
• Comprehensive Documentation: Include all relevant information, clearly indicating errors or oversights by the IRS.
• IRS Publications: Reference IRS Publication 5 for guidance on your appeal rights.

Preserving Your Rights

Even if you cannot resolve the issue immediately, it's essential to preserve your rights by responding promptly and taking documented action. Keeping thorough records of all communications with the IRS is wise, as you'll need these if further disputes arise.

Conclusion and Final Steps

Navigating an IRS letter like the 105C can be daunting, but taking immediate action and understanding your rights are key. If needed, seek professional assistance to guide you through this process.

Visit our dashboard for expert tax support, where professionals can help ensure your tax matters are handled with precision and care.