What If the IRS Says I Owe But I Already Paid?
You made a payment to the IRS. You have proof. But IRS notices say you still owe. This happens more often than you might expect—and the solution starts with understanding what the IRS actually has on record.
Why payment discrepancies occur
The IRS processes millions of payments. Payments can be misapplied, delayed, lost, or credited to the wrong account. What you paid and what the IRS has recorded are two different things.
IRS systems are not infallible. A payment you made may not appear in IRS records for many reasons—and until it does, the IRS will continue treating the balance as unpaid.
The burden is on you to demonstrate that a payment was made and should be credited to your account. This requires understanding how payments are tracked and what documentation proves payment.
Common causes of payment issues
Payment misapplication:
- Payment credited to wrong tax year (e.g., 2022 payment applied to 2021)
- Payment credited to wrong tax type (e.g., income tax payment applied to estimated tax)
- Payment credited to wrong taxpayer (e.g., joint payment applied to only one spouse)
- Payment credited to wrong entity (e.g., personal payment applied to business EIN)
Payment processing issues:
- Check lost in mail or processing
- Check received but held in suspense due to missing information
- Electronic payment failed but appeared successful
- Payment made to wrong IRS address or lockbox
Timing issues:
- Payment made after notice was generated but before it was received
- Estimated payments not yet linked to filed return
- Payment made but return not yet processed (payment in suspense)
Accrued amounts after payment:
- Penalties and interest continued to accrue after partial payment
- Payment did not cover full balance including accrued amounts
- Amended return or audit adjustment created new balance after payment
How to verify what the IRS received
The only authoritative source for what payments the IRS has credited to your account is your IRS Account Transcript.
An Account Transcript shows:
- Each payment posted to the account with date and amount
- Transaction codes indicating payment type (withholding, estimated tax, return payment)
- How payments were applied to tax, penalties, and interest
- Current balance after all credits
Request an Account Transcript for the specific tax year in question. Compare the payments shown on the transcript to your records of payments made.
Your records vs IRS records
Cancelled checks and bank statements prove you made a payment. IRS transcripts prove the IRS received and credited it. If your records show payment but transcripts don't, the payment is either lost, misapplied, or in suspense. A compliance review reconciles these records to identify discrepancies.
What IRS transcripts show about payments
Key transaction codes related to payments:
- Code 610 — Payment with return
- Code 670 — Subsequent payment (payment made after return filed)
- Code 660 — Estimated tax payment
- Code 806 — Withholding credit (from W-2s, 1099s)
- Code 700-series — Various credits applied
If you made a payment but don't see a corresponding transaction code, the payment was either not received, not processed, or applied elsewhere.
Proving you made a payment
Acceptable proof of payment:
- Cancelled check — Front and back, showing IRS endorsement
- Bank statement — Showing cleared payment to IRS
- IRS Direct Pay confirmation — Confirmation number and date
- EFTPS confirmation — Electronic Federal Tax Payment System receipt
- Credit/debit card confirmation — From IRS-authorized payment processor
- Money order receipt — Serial number and purchase receipt
- Certified mail receipt — If payment was mailed
Documentation that is NOT sufficient:
- Personal check register entries without cancelled check
- Accounting software entries without bank verification
- Statements from tax preparer without IRS confirmation
- Memory of making a payment
How to request payment correction
For misapplied payments:
- Contact the IRS (800-829-1040 for individuals) with proof of payment
- Request the payment be reallocated to the correct tax year and type
- Submit written request if telephone resolution is unsuccessful
For lost or missing payments:
- Submit Form 3911 (Taxpayer Statement Regarding Refund) to initiate payment trace
- Include copies of proof of payment
- IRS will research and either locate the payment or issue a replacement credit
If notices continue during resolution:
- Respond to each notice with reference to your payment trace request
- Include copies of proof and Form 3911 confirmation
- Request penalty and interest abatement for any amounts that should have been covered by the payment
Examples of payment discrepancies
Example 1: Payment applied to wrong year
Situation:
Taxpayer sent a $5,000 payment in April intended for 2023 taxes. The check memo said "2023 taxes" but the payment was applied to 2022. Taxpayer received a balance due notice for 2023.
Resolution:
Account transcript for 2022 shows the $5,000 credit. Taxpayer contacts IRS with cancelled check and requests reallocation to 2023. Once moved, 2023 balance is satisfied and 2022 shows new balance (if any was owed).
Example 2: Payment lost in processing
Situation:
Taxpayer mailed a check with their return. The check cleared their bank (shown on statement). But the IRS Account Transcript shows no payment—only the return filing and balance due.
Resolution:
Taxpayer submits Form 3911 with copy of cancelled check (front and back) and bank statement. IRS traces the payment, locates it, and credits the account. If payment cannot be located but proof is sufficient, IRS may credit the account based on documentation.
Example 3: Electronic payment failed silently
Situation:
Taxpayer made a payment through IRS Direct Pay and received a confirmation number. However, the bank account had insufficient funds on the debit date. Taxpayer assumed payment went through because they received confirmation.
Resolution:
Bank statement shows no debit. IRS transcript shows no payment. The confirmation number only confirms submission, not successful completion. Taxpayer must make a new payment. Penalties for dishonored payment may apply.
Key insight:
Making a payment and having the IRS credit that payment are two different events. IRS records are the authoritative source for what payments have been credited. If there's a discrepancy, you need both proof of payment (your records) and IRS transcripts to identify and resolve the issue.
Frequently Asked Questions
Verify Your IRS Payment Records
This guide explains why payment discrepancies occur. A compliance review analyzes your IRS account transcripts to determine what payments the IRS has on record and where discrepancies exist.
Verify Your IRS Payment Records