CP268: What It Means and How to Respond
By Forrest Baumhover, CFP®, EA · Last verified September 17, 2026
CP268 isn't a bill and it isn't quite a refund notice either — it's the IRS holding a business's excess credit in limbo, and the 30-day response window is what keeps that limbo from becoming a much slower problem.
If you got this letter
Got a CP268 in the Mail?
You got this letter because your business's account has more tax credit sitting on it than the return itself claimed, and the IRS's own systems found a math error connected to that mismatch — that combination puts a hold on the excess credit until it's resolved.
Read the notice carefully — it explains the change and lists the credits involved. Compare the IRS's numbers against your own return. Then call the toll-free number on the notice within 30 days to tell the IRS what to do with the extra credit: refund it to you, or apply it to a different tax or tax period.
That 30-day window matters because the IRS holds this kind of excess credit for a limited time before it acts on its own — waiting too long doesn't make the problem disappear, it just means the IRS decides what happens to the money instead of you.
If you respond within the 30 days and don't owe other taxes or debts the IRS is required to collect, expect the refund within four to six weeks. If that window passes without it arriving, call the toll-free number listed at the top of the notice.
The notice's own FAQ mentions a form for getting next year's refund by direct deposit rather than a check, naming it in connection with a corporation's Form 1120 or Form 1120-S — but the form number it prints (Form 8050) doesn't match the form's current, actual purpose (a tax-exempt or government entity's refund, not a corporation's), a mismatch we couldn't resolve by checking IRS.gov's own current page for that form. Ask the IRS representative you reach at the number on the notice for the current, correct way to set up direct deposit for next year's refund instead.
What the notice actually says
CP268 tells the business that the IRS "made changes to your return because we believe there is a miscalculation on your return. You have a potential overpayment credit because of this miscalculation." The instructions: read the notice, compare the IRS's figures against the return, and call the toll-free number within 30 days to request a refund check or ask that the credit be applied elsewhere. (For where CP268 sits among the other IRS notices, see the IRS Notice Library.)
CP268 is structurally different from the rest of this notice family, and that difference is worth understanding before responding. IRM 21.7.11.4.9 identifies CP268 as a "Q-freeze" notice: the IRS holds excess credit on a tax module — up to 39 individual credits, per the same IRM section — pending the taxpayer's instruction on what to do with it. It is a credit-review notice, not a tax assessment the way CP101 or CP11 are. Its sibling, CP267, is issued for the identical excess-credit situation when no math error is involved; CP268 specifically means a math-error return posted into the same module.
What actually triggered it
CP268 fires when a tax module carries more credit — payments, prior overpayments applied forward, or other credits — than the return itself claims, and a math-error correction is part of what produced that discrepancy. IRM 21.7.11.4.9 describes the mechanism as a "15-cycle freeze" that releases once the mismatch is resolved through a credit transfer, the module balance reaching zero or debit, or a specific adjustment code posting.
The underlying cause is usually a mismatch between what the return claimed as a credit or payment and what the IRS's own records show posted to the account — a payment applied to the wrong period, a credit-elect amount that didn't match the corrected return, or a duplicate posting. Before deciding whether to request a refund or a transfer, pull the account transcript for the period in question and identify each of the credits the notice lists individually — the IRS Transcript Decoder shows the transaction codes behind each one.
Response deadline and what happens if you miss it
IRS.gov's own CP268 page states the window directly: "Call the toll-free number listed on your notice within 30 days to request a refund check or to apply the credit to other types of tax or tax periods." That's neither the 10-day window CP101/CP102/CP117 carry nor the 60-day window CP107 or the individual math-error family carry — a genuinely separate figure, tied to IRM 21.7.11.4.9's own operational freeze period rather than any provision in IRC §6213.
The notice doesn't spell out a forfeiture consequence the way CP101 does for missing its 10 days. IRM 21.7.11.4.9 describes what happens procedurally instead: the freeze releases once one of its own resolution conditions is met, which can include the IRS issuing the refund on its own once the hold period runs its course. Practically, responding within the 30 days is what lets the business choose the outcome — a refund versus applying the credit elsewhere — rather than the IRS resolving the freeze by default.
The practitioner's actual next step
Reconcile every credit CP268 lists against the account transcript before calling — with up to 39 credits potentially in play per IRM 21.7.11.4.9, confirming which ones are legitimately the business's before instructing the IRS what to do with them avoids requesting a refund or transfer based on an IRS posting error rather than the business's actual credit position.
If a transfer to a different tax period is the right outcome, note IRM 21.7.11.4.9's own caution: credit transfers aren't processed if less than three weeks remain before the freeze expires, and a refund already issued generally can't be recalled — if that's happened, the guidance is to return the check uncashed, marked "Void," with instructions on where to apply it instead. Calling well within the 30-day window, rather than near its end, keeps every option open.
What CP268 gets confused with — and why the distinction matters
CP268's closest relative is CP267, its no-math-error sibling under the same IRM 21.7.11.4.9 Q-freeze mechanism — not currently a live page on this site. The two notices are functionally identical from the business's side (same 39-credit review, same freeze mechanism); the only difference is whether a math-error return happened to post into the same module.
CP268 is easy to mistake for a straightforward refund notice like CP111 or CP112, but the mechanism is different: those notices state a corrected liability and, absent action, simply refund the difference. CP268 holds the credit in a freeze specifically awaiting the taxpayer's instruction — doing nothing doesn't guarantee a refund the way it does on CP111 or CP112, since the freeze has its own release conditions.
CP268 is also worth separating from the individual math-error notices this site covers, CP11 and CP12: both of those are true math-error assessments under IRC §6213(b)(1), carrying the statutory 60-day abatement right under §6213(b)(2)(A). CP268 isn't an assessment notice at all — it's a credit-holding mechanism under separate IRM procedures — so that statutory right has no application to it, and the Math and Taxpayer Help Act's new notice-content rules (which amend §6213(b)(1) specifically) don't reach CP268 either.
Common Questions
Is CP268 a bill?
No. It tells the business it has more tax credit on the account than its return claimed, connected to a math-error correction — the notice is asking what to do with the excess credit, not demanding payment.
How long do I have to respond?
Call the toll-free number on the notice within 30 days to request a refund or ask that the credit be applied to a different tax or tax period.
What's the difference between CP268 and CP267?
Both notify a business of excess credit held under the same IRS "Q-freeze" review. CP268 means a math-error return posted into the same tax module; CP267 is issued for the identical situation when no math error is involved.