The CP63 is the IRS's way of using your refund as leverage. You filed a return for the current year and you're owed money. But the IRS has identified unfiled returns in prior years, and they're holding your refund hostage until those delinquent returns are filed.
How It Works
The IRS places a freeze code on your account that prevents refund processing. The CP63 identifies which tax years have missing returns. Until those returns are filed and processed, your current refund stays frozen.
The IRS can hold the refund for up to the amount of your potential tax liability for the unfiled years. If the delinquent returns result in balances owed, the IRS will apply your refund to those balances before releasing any remaining amount.
What to Do
File the delinquent returns identified in the CP63. All of them. Filing only one when you're missing three just means the freeze stays in place for the remaining two.
Once the delinquent returns are processed, the IRS recalculates your account. If the prior years result in refunds, those are added to your current year refund. If they result in balances, those are offset against your current year refund. The remaining amount is released to you.
The Timeline
After filing the delinquent returns, allow 8 to 12 weeks for the IRS to process them and recalculate your account. Paper returns take longer than e-filed returns. If you're filing multiple years, the processing time can stretch to 16 weeks or more.
Check your IRS Online Account periodically to monitor processing. Once the delinquent returns are posted to your account, the freeze code should be removed and your refund processed.
Don't Just File the Current Year
The most common mistake is filing only the current year and ignoring the prior years. That approach guarantees the CP63 will repeat next year. Get current on all filing obligations and stay current. Filing is the only way to release the freeze and the only way to prevent it from happening again.
Need help filing delinquent returns? Call us at (813) 229-7100.