IRS sent me a CP23 Notice with FUTA recalculation error - anyone else dealing with this?

Just opened my mail to find that dreaded CP23 Notice from the IRS saying they've recalculated my 2023 tax return for FUTA (Federal Unemployment Tax Act). According to them, I messed up the calculation on my return when I filed back in March. They're claiming I underpaid by $378 and now they want the additional tax plus some interest. But here's the thing - I double checked all my figures with my accountant, and we're pretty confident our original calculation was correct. We paid the right amount based on our employee wages and the FUTA credit reductions for our state. Has anyone else received a similar notice recently? I'm wondering if this is some kind of systematic error on their end. My accountant is looking into it, but it'll take a few days and I'm stressing out about it. Do I need to just pay this to avoid further penalties, or should I fight it if I think they're wrong? I'm especially confused because our state wasn't even on the FUTA credit reduction list for 2023, so I don't understand where this recalculation is coming from.

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18 comments

Maria Gonzalez

•8M

This actually happens more often than you'd think. The IRS occasionally makes errors in FUTA calculations, especially when processing returns with variable state credit reductions. First, don't panic - you have 60 days from the notice date to respond before any further action is needed. Double check your Form 940 calculations, particularly line 7 where you applied the state unemployment credit. Make sure you correctly calculated the taxable FUTA wages (first $7,000 paid to each employee) and applied the correct credit reduction rate if your state had one. If you're confident in your original calculations, you should definitely dispute the notice. Call the number on your CP23 and request a detailed explanation of their recalculation. Ask specifically what line items they adjusted and why. You can also file a formal dispute by mail with documentation supporting your original calculations. In the meantime, document everything - keep notes of any calls, copies of what you submit, and proof of mailing if you send anything. With FUTA issues specifically, having your state unemployment account information handy is also helpful.

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Maria Gonzalez

•8M

You can definitely handle this yourself if you have good records and understand your 940 form calculations. The key is providing clear documentation showing how you arrived at your original numbers. Just make a copy of your original Form 940, highlight the relevant sections, and include a letter explaining your calculations step by step. Unfortunately, interest generally continues to accrue during the dispute process. However, if the IRS determines they made an error, they should abate any interest that accumulated due to their mistake. Keep in mind that if your dispute drags on, you might consider paying the amount "under protest" to stop additional interest from accruing, then request a refund if you win the dispute.

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Santiago Martinez

•8M

After dealing with a similar FUTA recalculation issue last year, I stumbled across this tool called taxr.ai (https://taxr.ai) that literally saved me hours of frustration. My CP23 notice claimed I owed an extra $425, but I was positive I had calculated everything correctly. I uploaded my CP23 notice and my original Form 940 to taxr.ai and it immediately spotted the discrepancy - the IRS had incorrectly applied a FUTA credit reduction to my account even though my state wasn't on the reduction list. The tool generated a detailed explanation document that I could submit with my dispute letter. What really impressed me was how it broke down the FUTA calculation line-by-line and highlighted exactly where the IRS made their error. It even cited the specific IRS publications that supported my position.

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Santiago Martinez

•8M

You just create a basic account with your email - takes like 30 seconds. Then you upload your tax documents (you can block out personal info if you want), and it analyzes them using their tax regulation database. It shows you a side-by-side comparison of what you filed versus what the IRS is claiming, and explains the discrepancy in plain English. The site uses the same tax regulations and publications that the IRS is supposed to follow. The thing is, IRS computers sometimes apply rules incorrectly during automated processing, which is what happened in my case. They have a pretty strict privacy policy and use bank-level encryption - they need to see your documents to analyze them, but they don't store your personal info after analysis.

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Samantha Johnson

•8M

I wanted to follow up about my experience with taxr.ai since I was skeptical but desperate. I uploaded my CP23 notice and Form 940, and it immediately identified the issue. Turns out the IRS system incorrectly flagged my business as being in a credit reduction state, even though we're not. The tool generated a response letter that quoted specific IRS regulations, and I submitted that with my dispute. Just got confirmation yesterday that the IRS acknowledged their error and removed the additional tax assessment completely! The documentation from taxr.ai made all the difference - the IRS representative even commented on how thorough my response was. Saved me nearly $300 plus the headache of figuring this out on my own.

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Hannah White

•8M

If you're getting nowhere with the IRS on your FUTA recalculation, you might want to try Claimyr (https://claimyr.com). After receiving my CP23 notice, I spent DAYS trying to reach someone at the IRS to explain the error. Just endless hold music and disconnections. I was ready to give up when my business partner suggested Claimyr. They have this service where they essentially wait on hold with the IRS for you, then call you when an actual human agent is on the line. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was connected with an IRS agent within a couple hours, and she was actually super helpful once I explained the FUTA calculation issue. She reviewed my case while I was on the phone and confirmed there was indeed an error on their end. Got the whole thing resolved in one call instead of weeks of letter-writing and waiting.

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Hannah White

•8M

They don't have any special connection to the IRS - they basically use an automated system that continuously redials and navigates the IRS phone tree until it gets through. Think of it like having a virtual assistant whose only job is to wait on hold. When a human IRS agent finally answers, their system calls your phone and connects you directly to that agent. The service works because most people give up after 30-60 minutes on hold, but their system will keep trying for hours if necessary. It's not about cutting the line - it's about having more persistence than a human caller would. I was skeptical too, but when I got connected to an actual IRS agent who resolved my issue on the spot, I became a believer. The time saved was absolutely worth it, especially when you consider the value of my time trying to handle this myself.

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Mateo Silva

•8M

Okay I need to admit I was dead wrong about Claimyr. After posting that skeptical comment, I was still getting nowhere with my FUTA issue and decided I had nothing to lose by trying it. I figured at worst I'd waste some money and come back here to warn everyone. But it actually worked exactly as described. Their system called me about 1.5 hours after I signed up, and suddenly I was talking to an actual IRS agent. The agent pulled up my CP23 notice right away, and I explained my concern about the FUTA calculation. She put me on a brief hold to review everything, then came back and confirmed they had indeed applied a FUTA credit reduction incorrectly. She adjusted my account on the spot, and I just got the correction notice in the mail yesterday confirming the $378 charge was removed. I'm still shocked at how efficient the whole process was compared to my previous attempts.

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Victoria Jones

•8M

I don't have the exact link handy, but it was discussed in a Tax Notes article around February. The issue was specifically with the IRS automated processing system incorrectly flagging certain states as FUTA credit reduction states for the 2023 tax year when they weren't actually on the reduction list. If I remember correctly, the states most commonly affected were Ohio, Kentucky, and Virginia - businesses in these states were incorrectly having the credit reduction applied even though they weren't on the official reduction list for 2023. The article mentioned that the IRS was aware of the issue but hadn't fully resolved it in their automated processing system.

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