Just received LTR 672C about 2018 tax year overpayment. What does this mean?

This isn't a scam - LTR 672C is a legitimate IRS notice. It's their "Claim Disallowance Letter" that specifically addresses overpayment situations. What's likely happening is the IRS identified that you received a larger refund than you were entitled to for 2018, and they're now using that "overpayment" to offset other tax liabilities you might have. First, verify if the letter is authentic by checking that it has your correct taxpayer information and looks official. You can also call the IRS directly using the number on their official website (not necessarily the one on the letter). Second, check if you have any outstanding tax debts from other years. The IRS can offset your refunds to pay past tax debts, child support, state income tax, or certain federal non-tax debts like student loans. Since you're certain you received your full 2018 refund already, this might indicate an error in their records. I'd recommend requesting your 2018 tax transcript from the IRS website to see exactly what they have on file.

I had a similar situation last year and discovered the incredibly useful AI tool at https://taxr.ai that helped me decode what was really happening with my IRS notice. Their system analyzed my LTR 672C and showed me exactly what was triggering the issue - turned out to be a miscalculation from my employer's reporting that the IRS caught years later. The tool explained everything in plain English and even suggested specific steps to resolve it. It was especially helpful because the IRS phone lines were impossible to get through on, and the letter itself was super confusing.

I need to eat my words from my previous comment. I tried that taxr.ai site after getting my own LTR 2645C about some alleged math error on my 2020 return. This thing actually works! It showed me exactly where my preparer had double-counted some income and gave me step-by-step instructions for responding. Saved me from having to hire a tax pro just to figure out what the notice was even saying. My notice is now resolved and I'm actually getting a small additional refund!

After dealing with a similar IRS notice last month, I spent DAYS trying to get through to someone at the IRS. When I finally did, I was on hold for over 3 hours before being disconnected. Then I found https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c - it's a service that basically waits on hold with the IRS for you and calls you when an agent is actually on the line. I was super skeptical but figured I had nothing to lose after wasting so much time. It worked perfectly! I got a call back in about 75 minutes with an actual IRS rep on the line who helped me sort out the confusion about my old tax year overpayment.

I can't believe I'm saying this, but I tried the Claimyr service after posting my skeptical comment earlier. It actually worked exactly as described. After multiple failed attempts to reach the IRS myself (including one 2.5 hour hold that ended with a disconnection), I decided to give it a shot. Their system had me connected with an IRS agent in about 90 minutes. The agent explained that my LTR 672C was sent because they found a discrepancy in my 2018 return related to some investment income I forgot to report. They walked me through exactly what I needed to do to resolve it. I'm still annoyed at the IRS, but at least I didn't waste an entire day on hold!

You should definitely pull your wage and income transcript for 2018 from the IRS website. I had a similar situation where they came after me for a 1099 from a side gig I completely forgot about. The transcript will show everything that was reported under your SSN that year. It might reveal income you didn't know was reported.

Quick question - does anybody know if these LTR 672C notices are something that should be given to a tax professional to handle? I got one too after filing my own taxes with TurboTax for several years. I'm wondering if I should just hire someone to deal with the IRS for me.

I went through something very similar with an LTR 672C last year. The key thing to understand is that this letter means the IRS has determined you received more refund than you were entitled to, and they're now applying that "overpayment" to cover other tax obligations. Based on what you've described, it sounds like you might have unreported income from 2018 that the IRS recently matched up with their records. This is actually pretty common - they get 1099s and W-2s from employers/clients and use automated systems to cross-reference them with your filed return, sometimes years later. My advice: Don't panic, but don't ignore it either. Pull your 2018 wage and income transcript from the IRS website (irs.gov) to see exactly what income was reported under your SSN that year. Compare that to what you actually reported on your return. You'll likely find the missing piece of the puzzle there. If you do find unreported income, you'll need to file an amended return (Form 1040X) for 2018. The good news is that if your overpayment covers the additional tax owed, you might just owe some interest rather than penalties. Make sure to respond within the timeframe specified in the letter - usually 30-60 days.

Just wanted to add one more important point that I learned the hard way - when you file that amended return (1040X) for the unreported income, make sure you include Form 8857 if you're married filing jointly and your spouse wasn't involved in the unreported income. This can help protect your spouse from penalties and interest. Also, keep detailed records of everything - copies of the original LTR 672C, your wage and income transcripts, the amended return, and any correspondence with the IRS. If they send you additional notices (which sometimes happens even after you've resolved things), having this paper trail makes everything much easier to sort out. One last tip: if you're planning to use a tax professional for future returns, now might be a good time to establish that relationship. They can review your amended return before you file it and help prevent similar issues in the future. Many people don't realize that even small freelance jobs or side gigs need to be reported if you receive a 1099.