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CP321K notice: what it means and what to do
Got an IRS CP321K notice? Here is what it means, your deadline, what to check before you answer, and how to reply. Check your own letter free: it stays on your phone.
Check my CP321K notice freeWhat the IRS says this notice is about
This notice is to inform potentially impacted taxpayers they may be able to claim theft loss.
What you need to do
To claim the theft loss you should:
- Report the interest income from the TreasuryDirect Form 1099-INT on your 2025 return.
- Complete Section B on Form 4684, Casualties and Thefts PDF , for income-producing property for the year you discovered the theft and received any recovery of funds.
Part I of Section B should be completed using the following information:
- The adjusted basis of the property on Line 20 is equal to the original investment plus the amount reported on Form 1099-INT.
- Any funds recovered must be reported as “other reimbursement” on Line 21.
- The fair market value before the theft on Line 23 should be the total redemption amount of the securities.
- The fair market value after the theft on Line 24 should be $0.
Part II of Section B should be completed with the loss(es) entered in column (b)(ii) and any final calculated loss reported on the indicated line of Schedule A, Itemized Deductions.
If you have already filed for the year and are able to claim a theft loss in that year, you should consider filing an amended return . E-filing remains the fastest and most secure way to file an amended tax return.
Your deadline
Answer by the date printed on your notice. If there is no date, answer as soon as you can, and call the number on the notice if you need more time.
What to check before you answer
Is this letter really from the IRS?
The IRS writes first by mail. A real letter shows a notice or letter number, your name and part of your tax ID number. The IRS does not ask for payment by gift card, crypto or wire transfer. If in doubt, sign in to your IRS online account, where many notices are listed.
You may want to
Create or login to your Online Account to:
- View your balance
- Make and view payments
- View or create payment plans
- Access tax records
Login to your TreasuryDirect account to:
- Review the TreasuryDirect FAQs
- Determine how much money was recovered
Get an identity protection PIN (IP PIN) . An IP PIN can help prevent misuse of your SSN or ITIN on fraudulent federal income tax returns.
Common questions
When can I claim a theft loss?
You can claim a theft loss once you’ve recovered as much as you can. TreasuryDirect has informed us that they have recovered all the funds they are able to recover. Therefore, you may claim a theft loss for the tax year when you received a partial recovery of funds from TreasuryDirect or were informed that TreasuryDirect was unable to recover any funds on your behalf.
- Example 1 : You received a partial recovery of funds in 2025 or were told in 2025 that TreasuryDirect was unable to recover any funds for your account. You can claim the theft loss on your 2025 tax return. If you already filed your return, you may file an amended return to claim the loss.
- Example 2 : You received a partial recovery of funds in 2026 or were told in 2026 that TreasuryDirect was unable to recover any funds for your account. You can claim the theft loss on your 2026 tax return. Please note that you must still report the interest income from the TreasuryDirect Form 1099-INT on your 2025 tax return.
Helpful information
File an amended return
Frauds, Phonies, & Scams , TreasuryDirect
Report tax fraud, a scam or law violation
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