IRS CP60
Reversed Payment — Balance Reinstated
A payment credited to your account was reversed — your balance is back.
Deadline
21 days from notice date
Interest and penalties have continued to accrue since the original liability date. Act within 21 days to minimize further charges.
Respond promptly to protect your options and avoid escalation.
What IRS CP60 Means
CP60 is issued when the IRS reverses a payment that was previously credited to your account, reinstating the original balance. The most common reason is a returned check — when an ACH payment or check is returned by your bank for insufficient funds, the IRS reverses the credit and reapplies the balance.
Other causes include a misapplied payment (a payment credited to the wrong tax year or entity) that the IRS has now corrected. If a payment meant for one year was applied to another, the year it was removed from will show the balance reinstated on CP60.
The balance shown on CP60 is the reinstated amount plus any penalties and interest that accrued since the original liability date — including the period when you thought you had paid. This means your effective liability is higher than the original amount.
What the IRS Can Do If You Don't Respond
- Accrue failure-to-pay penalties and interest as if the payment were never made
- Escalate to collection notices and levy action
- Charge a returned check penalty under IRC §6657
- File a Notice of Federal Tax Lien
What You Should Do Right Now
- 1
Determine why the payment was reversed — check with your bank if it was a returned check
- 2
If it was a returned check, resubmit payment immediately and address the bank account issue
- 3
If it was a misapplication, gather proof of the original payment and contact the IRS to correct the posting
- 4
Request a payment plan if you cannot pay the reinstated balance in full
- 5
Consider paying by credit card or certified check to avoid future returned payment issues
Resolution Options Available to You
Frequently Asked Questions About IRS CP60
Why did the IRS reverse my payment?
Most commonly, your check or ACH payment was returned by your bank (insufficient funds, closed account, or stop payment). Less commonly, the IRS misapplied a payment and is correcting it.
Will I be charged a returned check fee?
Yes — the IRS charges a bad check penalty of 2% of the check amount under IRC §6657 (25% if the check is under $1,250).
How do I prove a payment was misapplied?
Gather your bank records showing the payment cleared (or was returned), and a copy of the payment confirmation. Contact the IRS with this documentation to request a payment trace and correction.
Can I set up a payment plan after CP60?
Yes — you can request an installment agreement for the reinstated balance. Acting quickly reduces the interest and penalty accrual on the reinstated amount.
Professional References
IRC: IRC §6657 — Bad Check Penalty; IRC §6601 — Interest on Underpayments
IRM: IRM 21.5.7 — Payment Application and Misapplication
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