What CP267 means

CP267 says the credits you claimed on your business return don't match the credits the IRS actually applied to that period. Credits here means federal tax deposits or estimated tax payments. The difference created an overpayment on the account.

The IRM title is No Math Error, Credit Offset Notice. It notifies you of possible misapplied payments and lets you tell the IRS where they should go.

If you don't respond, the IRS says it will refund the overpayment, unless you owe other tax or debts it is required to collect.

Why you got it

An overpayment from mismatched credits usually means one of these happened:

  • A deposit meant for another quarter or another tax type posted to this period.
  • Your return claimed fewer deposits than you actually made.
  • A payment intended for a different entity under a different EIN landed here.
  • Estimated payments for the next year were applied to the current year by mistake.

The money exists. The question is whether it belongs on this period.

The 30-day window

The IRS says that if you disagree with the notice, contact it within 30 days from the date of the notice to tell it where the payments should be applied. Internal procedures say CP267 requires a response and is worked on an expedited basis.

That matters because of what happens if you stay quiet. The IRS says it will assume you agree and send a refund check within 15 weeks from the notice date. If the payment really belonged to another quarter that now shows a balance, you will get a refund on one period and a bill with penalties and interest on another.

A refund you did not expect is often a balance due you have not seen yet.

Read the payment list line by line

The notice shows the dates and amounts of the payments the IRS applied to the period. Put them next to your own list. For each line, ask three questions. Is this a payment we made? Was it meant for this form and this period? Is the amount right? Any "no" is the reason for the notice.

Pay special attention to payments made near the start or end of a quarter, and to any payment made by someone other than the business, such as an owner paying personally or a payroll provider paying in bulk. Those are the ones most often recorded in the wrong place.

What to do now

  1. Read the payment list. The notice shows the dates and amounts of payments applied to the period.
  2. Compare with your records. Match each deposit to your bank statements, EFTPS history, and payroll records. Note the intended tax form and period for each.
  3. If payments were misapplied: call the number on the notice or mail copies of the notice and proof of payment to the address on it, within 30 days. Tell the IRS exactly where each payment belongs.
  4. If you agree: the IRS says to call and request the refund, and correct your copy of the return.
  5. Check other periods. If a payment moved, the period it should have gone to may now show a balance. Look at the transcripts for neighboring quarters.

What to say when you call

The IRS's own guidance: tell the representative you received a CP267 and want to review your account. Have the notice and your tax return in front of you. Have documentation ready, such as canceled checks, EFTPS confirmations, and any amended return. Write down the date, the representative's ID, and what was agreed.

When the IRS moves a payment, it uses a credit transfer, which the IRM covers in its credit transfer procedures. Ask the representative to confirm the transfer and the period it went to.

If you owe other taxes

An overpayment does not always become a check. IRC 6402(a) allows the IRS to credit an overpayment against other federal tax the same taxpayer owes and refund only the balance. The IRS page for CP267 says the refund goes out unless you owe other tax or debts it is required to collect.

How this happens with payroll deposits

Most CP267 notices trace back to deposit records. A deposit entered for the wrong quarter in EFTPS is the classic case. Another is a payroll provider making a deposit on its own account number or under the wrong EIN. A third is a deposit made in early January for December payroll that the business recorded in the new year while the IRS recorded it in the old one.

Keep a deposit log that shows, for each payment, the date, amount, form, and period. It turns a CP267 from a mystery into a fifteen-minute phone call.

Next period

The IRS suggests claiming the proper amount of credit on your next return and adjusting estimated payments or deposits as needed. If you are an estimated tax payer, check that next year's payments are designated to next year. If you are an employer, match deposits to the right quarter every time.

What not to do

Do not cash an unexpected refund without knowing why you got it. If the money belonged to another period, you will owe it back with interest.

Do not let the 30 days pass if you think a payment is in the wrong place.

Do not assume your payroll provider will catch it. Check the deposit history yourself.

If the overpayment also involves a math error on the return, you may receive CP268 instead. For employment tax deposit mismatches that create a balance due rather than an overpayment, see our guide to CP134B.

The law behind CP267

IRC 6402 governs how the IRS credits and refunds overpayments, including applying them to other liabilities. IRM 21.3.1.7.40 describes CP267 as a notice of possible misapplied payments that requires a response and is worked on an expedited basis. IRM 21.7.11.4.9 covers the CP267 and CP268 excess credit notices, and IRM 21.5.8 covers credit transfers.

If deposits are scattered across the wrong periods and you need them put back, call us at (813) 229-7100.