CP06: What It Means and How to Respond

What the notice actually says

CP06 tells you the IRS is auditing your return specifically to verify the Premium Tax Credit claimed under IRC §36B, and that it is holding your refund — in whole or in part — until that audit is complete. The IRS's own explainer is direct about the word "audit," and the Taxpayer Advocate Service confirms CP06 functions as an Initial Contact Letter opening a correspondence examination conducted entirely by mail.

That distinction is the single most important fact on the page. A notice that merely asks you to explain a mismatch — like CP2000 — is not an audit and carries no refund hold. CP06 is both. Read the letter as what it is before deciding how urgently to respond.

What actually triggered it

The IRS selects returns claiming PTC for this review using "random sampling, computerized screening, and comparison of information we received, such as Forms W-2 and 1095-A." Being selected doesn't by itself mean something is wrong — it means the IRS wants documentation before it can confirm the credit as filed. In practice, the recurring trigger is a gap between the Advance Premium Tax Credit reported by the Marketplace on Form 1095-A and the reconciliation computed on Form 8962 — a difference the IRS's own data can't resolve without documentation from you.

This can happen even when the original return was correct: a household size or income estimate that changed mid-year, a 1095-A that arrived with an error, or coverage that started or ended partway through the year are all common, fixable causes.

Response deadline and what happens if you miss it

The IRS states this one plainly: provide all documentation within 30 days of the date printed on the notice. This is a stated, verified number, not an estimate.

Miss it, and the case doesn't pause — it moves forward without you. The IRS issues an audit report proposing specific changes, "which may include more tax for repayment of the APTC (the Advance Premium Tax Credit) and any applicable penalties and interest" — correspondence-exam procedure generally identifies a report like this as a "30-day letter" (Letter 525), which itself carries the right to request a conference with the IRS Independent Office of Appeals before the case goes any further. If Appeals doesn't resolve it either, the next step is a Statutory Notice of Deficiency — the "90-day letter" that opens a strict, jurisdictional window to petition U.S. Tax Court. File even a day late on that one and the court has no authority to hear the case, regardless of the merits.

The practitioner's actual next step

Get the client's Form 1095-A first — every CP06 case runs through reconciling that form against Form 8962, and you can't do that reliably from memory or a prior-year assumption. Recompute the PTC reconciliation independently rather than assuming the original return's Form 8962 was right; a shifted household size, a mid-year Marketplace plan change, or an income estimate that didn't match the actual return are the most common real causes.

Assemble documentation to the specific list on Form 14950 — proof of enrollment, income, and premiums paid — rather than sending whatever the client has on hand. Because this is a genuine audit, treat the file with the same discipline you'd apply to any correspondence exam: complete, organized, and responsive to exactly what was asked, since an incomplete response inside the 30-day window doesn't buy meaningfully more time.

What CP06 gets confused with — and why the distinction matters

The most consequential mix-up is with CP2000. Both notices ask a taxpayer to reconcile a mismatch, but the IRS's own CP2000 materials deliberately avoid the word "audit," calling the process "Tax Return Reviews By Mail" and stating outright that "this notice isn't a bill." CP06 carries none of that softer framing — it is a formal examination with a refund hold attached, and it carries the audit protections (and audit consequences) that come with that status. Treating a CP06 like a CP2000 matching letter under-serves the client on exactly the rights — and the refund-release timeline — that make CP06 different.

There is no business-side version of this notice to confuse it with. The Premium Tax Credit is structurally an individual benefit tied to Marketplace coverage, so no entity-level equivalent exists.

Common Questions