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CP539 notice: what it means and what to do
Got an IRS CP539 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 CP539 notice freeWhat the IRS says this notice is about
This is the fourth and final notice about your underreported or unpaid interest and dividend income. If you don’t resolve this by the date on your notice, we’ll send a final "C" notice and put backup withholding (BWH) into effect.
What you need to do
- Review your filed Form 1040 for underreported interest or dividend income. File a Form 1040-X, Amended U.S. Individual Income Tax Return , for any underreported interest or dividend income.
- Pay all taxes owed on Form 1040 with interest or dividend income. Use your online account to view your balance and more.
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
Stock, fund or crypto sales: check your cost basis
You owe tax on the gain, the sale price minus what you paid, not on the full sale price. If the notice counts the full sale price as income, send your broker statements that show what you paid. This often lowers the amount a lot.
Payment app income (Form 1099-K): check personal payments
Money from friends and family, reimbursements, and personal items sold for less than you paid are not taxable income. If the notice counts them, list them and send your records.
Retirement distribution (Form 1099-R): was it rolled over?
Money moved into another retirement account within 60 days is generally not taxable. If that is your case, send the statement that shows it.
Self-employment income (Form 1099-NEC or 1099-MISC): count your expenses
If this was business income, your business expenses lower the taxable amount. Send a Schedule C with your expenses and keep your receipts.
State tax refund (Form 1099-G)
A state tax refund is generally taxable only if you itemized deductions the year before. If you took the standard deduction, say so in your answer.
You can agree with some items and not others
The response form lets you agree with part of the changes. Explain each item you disagree with and attach a document for each one.
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
- Read about BWH .
- Review Publication 1335, Underreporter Backup Withholding Questions and Answers PDF .
- View your payoff amount, payment history, or order transcripts using the Online account tool.
Common questions
What is BWH? (updated Oct. 29, 2025)
This is when we instruct the payers of certain types of income (most commonly interest and dividends) to withhold a percentage of tax from future payments.
What is the BWH rate? (updated Oct. 29, 2025)
The current rate is 28% and can increase or decrease with the tax laws.
How long will the payers continue BWH? (updated Oct. 29, 2025)
The payers should continue until we tell them to stop or until you show them written certification from us that you’re not subject to BWH anymore.
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