I went through this exact same situation last tax season and totally understand the anxiety! That "Action Required" message is honestly so misleading - it should really say "Review in Progress" instead because in most cases you don't actually need to take any action. From my experience and what I've seen in this community, the IRS uses this status when they're doing routine verification checks on things like W-2 matching, dependent verification, or credit eligibility. The key thing is they explicitly tell you they'll MAIL you a notice if they need anything specific from you. Since you just got this message and haven't received any mail yet, you're likely in the automatic review phase where they're just cross-checking your information internally. I know it's tempting to call them, but honestly their phone reps can't tell you anything more than what's already on the website. My advice: check your physical mailbox daily for any actual notices, but try to resist the urge to check WMR obsessively (I know, easier said than done!). Most people in your situation get their refund within 2-6 weeks without having to do anything. The waiting is the hardest part, but you're definitely not alone in this! 🤞

I'm going through the exact same thing right now! Got that "Action Required" message two days ago and have been a nervous wreck ever since. Reading through everyone's experiences here is honestly the most reassuring thing I've found online about this situation. It's really helpful to see that so many people got this message and ended up receiving their refunds without having to send any additional documents. The wording on the IRS website is so anxiety-inducing - like @Justin Chang said, "Review in Progress" would be so much better than "Action Required"! I've been checking WMR obsessively but I think I need to follow everyone's advice and just focus on checking my physical mail instead. The fact that they specifically say they'll mail a notice if they need anything gives me some peace of mind that no mail = no action needed right now. @Holly Lascelles I totally feel you on being nervous about this when you're counting on that refund money. Fingers crossed we both get through this review process smoothly! Thanks to everyone sharing their experiences - it really helps to know we're not alone in this stressful waiting game. 🤞

Don't forget about Section 179! In 2025, you can potentially deduct up to $1.2 million of qualified business assets in year 1 instead of depreciating over time. This could help offset some of the impact of those non-deductible principal payments.

Based on all the great advice here, I'd strongly recommend getting a CPA involved sooner rather than later. The loan treatment is just one piece of the puzzle - you'll also need proper asset allocation for the purchase, quarterly estimated tax planning since S Corp profits flow through to your personal return, and basis tracking from day one. Since you're closing in a couple weeks, make sure your purchase agreement clearly specifies the asset allocation. The IRS requires you and the seller to agree on how the $250k+ purchase price gets allocated across different assets (equipment, customer lists, goodwill, etc.) using Form 8594. This allocation directly impacts your future depreciation/amortization deductions. Also consider setting up a separate business savings account specifically for tax payments. With $60k annual loan payments reducing available cash and S Corp profits flowing through to your personal taxes, you'll want to systematically set aside money for quarterly estimates to avoid underpayment penalties.

I received a 3176C letter about two years ago and it was definitely stressful at first! Mine ended up being related to some education credits I claimed. The letter itself is actually pretty standard language - it basically says they're taking additional time to review your return and will contact you if they need any documentation from you. The whole process took about 10 weeks for me, but I've heard it can vary quite a bit depending on what they're reviewing. One thing that helped me was setting up an online account on the IRS website so I could monitor my transcript - you can see when there are updates to your case status. Try not to worry too much, it's really just a processing delay rather than anything serious!

I got a 3176C letter about 3 months ago and just wanted to share my experience to help ease your mind! Like others have said, it's really not as scary as it sounds. Mine was triggered by some dependent care expenses I claimed. The letter was actually pretty straightforward - just said they needed additional time to review my return and would contact me if they needed more info. I never heard back from them after that, and my refund showed up about 11 weeks later. The key is definitely setting up that online account to check your transcript - I probably checked it way too often but it was the only way to see progress. Don't stress too much about it, these letters are way more common than most people realize!

Does anyone know if we can get tax refunds without waiting for these health forms? I haven't received any 1095 forms yet and I really need my refund ASAP.

I was in a similar situation last year and got really stressed about this! The tax software kept asking about 1095-A even though I've been on Medicaid for years. Turns out you can just select "No" when they ask if you received a 1095-A form and continue filing normally. Medicaid counts as qualifying health coverage, so you're all set. Don't let the software's questions confuse you - they ask everyone the same questions regardless of their insurance type. I filed successfully without any 1095-A form and got my refund without any issues.

Has anyone dealt with their state's abandoned property laws when dissolving? I'm in a similar situation, and was told that if you can't repay all the shareholder loans, the unpaid portion might need to be reported as abandoned property to the state after dissolution. Seems crazy but my accountant mentioned it.

One thing to consider that hasn't been mentioned yet is the timing of your dissolution. Since you have substantial outside basis ($135K) and are only getting $7K back, you'll have a significant capital loss. Make sure you understand the capital loss limitations - you can only deduct $3K per year against ordinary income, with the remainder carried forward. Given the size of your loss, this could take decades to fully utilize unless you have capital gains to offset it against. Also, regarding the debt vs. distribution question - since you're the sole shareholder, the tax result is essentially the same. However, from a documentation standpoint, I'd recommend treating the $7K as a partial loan repayment and then formally canceling the remaining debt. This creates a cleaner paper trail showing you attempted to collect what you could before forgiving the balance. Don't forget to file Form 966 within 30 days of adopting the plan of liquidation, and make sure your final 1120S properly reflects the debt cancellation income (even if excluded under Section 108) and the corresponding basis adjustments on your K-1.