IRS Notice · CP63 · Refund Held

CP63: your refund is being held over a year you didn't file

A CP63 means the IRS is holding a refund you are owed for one year because a return for a different year is missing. It is the most fixable notice in this family — usually one filing — and the reason to move on it is that money can expire.

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This letter is unusual and the unusual part is good news: the IRS owes you something. A CP63 is not a bill. It says a refund exists and is being held, and it names the reason — an older year with no return on file, on which the IRS believes tax may be owed.

The IRS's own wording is careful and worth reading exactly: "We're holding your refund because our records show you still haven't filed one or more tax returns, and we believe you'll owe additional tax." Two things there. The hold is about the missing return. And the belief about what you owe is a belief, not a determination — nothing has been assessed on that older year.

The fix is usually one return. File the missing year, and the hold has nothing left to rest on.

The reason not to leave it is that refunds do not wait indefinitely. A refund has its own expiry, generally three years from the original due date of that year's return, and once it passes nobody has the authority to release it.

(800) 236-3741 — the line is answered 24 hours a day, seven days a week. The first call is free, with no obligation and no conditions.

Key takeaways

•A CP63 holds a refund for one year because a return for another year is missing and the IRS believes tax is owed on it.
•Your notice prints a date to file by. It is an absolute date, not a day count — the IRS publishes no standard period for this notice, and the date on your copy is the operative one.
•Nothing has been assessed on the older year. The IRS says only that it will "determine your tax for you" if you do not file — which is a computation from third-party records, not an audit finding.
•Filing the missing return is the usual action — and not the only one. The notice's own wording is "If we don't receive your tax return or a valid reason for not filing", and the IRS says it can release a refund on receiving past-due returns "or an explanation showing you did not have to file for those years." There is no form to request the release itself and no appeal at this stage.
•Two clocks run in opposite directions. The IRS has unlimited time to assess an unfiled year. Your refund on any year expires, generally three years from that year's original due date.
•If the older year turns out to produce a refund too, that is a second reason to move rather than a reason to relax.

What a CP63 is

A CP63 is a notice that the IRS is holding a refund pending an unfiled return. From the notice: "Our records show that you didn't file your [year] Form 1040. As a result, we're holding your [later year] tax refund until we can determine whether you owe additional taxes for [year]. Please file your [year] tax return, or we may determine your tax for you."

The mechanism is offset in advance. Rather than pay you a refund on one year while a possible liability sits unquantified on another, the IRS holds the money until the second year is resolved. It is a cash-flow decision on the IRS's part, not a penalty and not an accusation.

Two things the notice does not say, and both matter to how worried you should be. It does not say you owe anything on the older year — it says the IRS believes you will. And it names no amount, because there is nothing to name until a return exists.

One thing it does say, in the "if we don't hear from you" section, which is the whole reason to file rather than wait:

"If we don't receive your tax return or a valid reason for not filing by [date], we may determine your tax for you based on information we've received from third parties. This means you may not receive certain exemptions, deductions, or credits that you would otherwise receive if you filed your own tax return."

That is the IRS explaining, in its own words, why its number is worse than yours. Not because it is punitive — because it is working from less.

Your clock

A CP63 prints a date, and it is an absolute date rather than a day count. The IRS publishes no standard period for this notice — its own page declines to give a number and points at the letter — so there is no general rule to check your date against. The date printed on your copy is the one that governs, and it is the only one that does.

What that date does and does not do. It is the point at which the IRS may start computing the older year itself. It does not forfeit a right — you can still file after it, and the IRS will still accept the return.

The date that cannot be missed is a different one. A refund expires generally three years from the original due date of the year it belongs to. Under IRC 6511 the claim must be filed within three years of filing the return or two years of when the tax was paid, whichever is later — and for withheld wage tax, IRC 6513(b)(1) treats the tax as paid on the original due date. So for a wage earner the clock started without them, and once it closes the money is not reduced, it is gone.

That applies to both years in play here. The refund being held has its own expiry. And if the missing year also turns out to carry a refund, so does that one — and it is older.

Sources: IRS Notice CP63 specimen, irs.gov, read 6 September 2026. IRS, "Understanding your CP63 notice," reviewed 6 September 2026. Internal Revenue Code sections 6511 and 6513, read 6 September 2026.

What happens if you do nothing

The IRS computes the older year, and the refund is applied to whatever it computes.

That produces the worst version of both problems at once. The number is built from third-party records with none of the deductions or credits you might claim, at a filing status of single or married filing separately. And your held refund is the first thing it is offset against, so money you were owed disappears into a liability that is larger than the real one.

Meanwhile, penalties accrue on any tax that turns out to be due — failure to file at 5% of the unpaid tax per month or part of a month up to 25%, failure to pay at 0.5% per month up to 25%, and where both apply to the same month the filing penalty is reduced by the payment penalty, so the combined figure is 5% a month rather than 5.5%.

And the refunds keep aging. Every month of waiting is a month closer to a year becoming unclaimable, and that is the only part of this that cannot be undone later.

What to do

Step one, today, and it is the whole job on most CP63s: work out what the missing year actually contains. Pull the wage and income transcript for it. For a year with a W-2 and not much else, that transcript is most of the return.

1. Get the wage and income transcript for the year named on the notice.

2. File that return — or, if you were not required to file for that year, tell the IRS so. The notice's own phrasing is "your tax return or a valid reason for not filing." Both routes resolve the year; only one of them involves preparing a return.

3. Check whether the missing year produces a refund rather than a balance. It happens more often than people expect on a year with withholding and low income — and if it does, the question changes from "how much will this cost me" to "how much of this is still claimable."

4. File by the date on your notice if you can, and file after it if you cannot. Later is better than not, and the date does not close a door.

5. Check whether other years are missing too. A CP63 names the year that is blocking this refund. It is not an inventory.

What is harder than it looks here has nothing to do with the filing. It is the case where the missing year is not simple — self-employment, a business, a property sale, a retirement distribution — because the transcript shows those as gross figures with none of the basis, expenses or exclusions that make them less alarming than they appear. A transcript reports the sale price of a property, not the gain on it, and a return filed as though the two were the same is worse than no return at all.

Two things worth reading next, depending on where this goes. Unfiled back tax returns covers what filing an old year actually involves. And if this is not the only missing year, how many years you really have to file is the next question.

The Non-Filer's First 30 Days

Which years to file and in what order. On a CP63 the ordering question is live in a way it usually is not — you have a refund being held, a missing year that may itself carry one, and expiry dates running on both. The sheet sets out how to work that out.

A first name and an email address — a mailing list, plainly said. The figures move and this is how corrections reach you.

[ Get the sheet ]

Or call (800) 236-3741 and tell us the two years on your notice. The gap between them usually says whether this is a one-return job or something wider — and whether either year is close to expiring. No charge and no obligation.

The Kentucky note

Kentucky holds refunds too, and it does it for its own reasons on its own timetable. A federal refund released does not release a state one, and the two offset programs do not talk to each other.

Where the two diverge is in what they cost you: your CP63 costs time, and a Kentucky assessment on the same year would cost a right. Its Notice of Tax Due carries a 60-day protest window under KRS 131.110, running from the date of the notice rather than from receipt, with the protest required in writing — a genuine forfeiture, which nothing on your CP63 is. And the Department of Revenue says a 25% cost-of-collection fee may be added to unpaid tax 60 days after the original notice date, at a rate set by KRS 131.440(1)(a)1, the 60-day trigger being the department's administrative practice rather than statutory text.

A federal refund held is an inconvenience. A Kentucky assessment is a shorter clock with a separate charge attached — and the protest window and the fee are two different exposures rather than one, so protesting is not by itself a shield against the fee. Kentucky's Notice of Tax Due covers the state clocks.

Katherine M. Johnson, CPA, CTRS

Katherine M. Johnson is a licensed CPA with over 30 years of experience and a Certified Tax Resolution Specialist (CTRS). She personally handles every case — representing individuals and businesses before the IRS and state revenue departments nationwide.

Read full bio

What we see

The CP63 is the letter people are most relieved to receive and most likely to sit on, because nothing bad is happening and the refund feels safe where it is.

And it is worth saying plainly to anyone who has been putting an old year off: a missing return is not a confession and filing it late is not an admission of anything. The IRS's own process here is asking for a document, not for an explanation. Nobody who works on this needs to know why the year went unfiled, because the answer does not change what gets done about it.

The question we are asked first on these is almost always whether filing the old year will cost someone the refund they are waiting for. The honest framing is that the held refund is going to meet whatever that year produces either way; what is still in play is only whether the number it meets is one you computed or one built from a transcript alone. So the first thing we look at is the missing year itself — what the wage and income transcript shows for it, and whether anything on there is a gross figure that will read far worse than it is. None of that needs an explanation of why the year went unfiled, and nobody here asks for one. One transcript for one year is the whole first step, which is a much smaller thing than the drawer it has been sitting in.

Katherine — you are welcome to swap this for what a CP63 actually looks like from your desk.

If you would rather ask than read: (800) 236-3741. You do not have to have decided anything, and you do not have to have opened the rest of the envelopes.

Where this sits

Notice	What it is
CP59 → CP515 → CP516 → CP518	The requests for the missing return itself.
CP63▶ You are here	A refund on one year held because another is missing. The IRS "may" determine the tax.
CP88	The near-identical twin — same hold, and the IRS says it will determine the tax.
CP2566	If the missing year goes unfiled: the IRS's own computation, with 30 days.

The missing-return sequence: CP59 → CP515 → CP516 → CP518 →See the full library →

Common questions

Will I lose the refund they're holding?

Not because of the hold itself. It is held, not forfeited. But refunds do expire on their own schedule — generally three years from the original due date of the year they belong to — so a hold that lasts long enough can outlive the refund. Filing the missing year is what ends the hold.

What if the old year means I owe money?

Then the held refund is applied against it, which is the ordinary outcome and is usually better than it sounds — you are paying a liability with money you were already owed rather than out of pocket. And a return you file contains what the IRS's computation cannot — deductions, credits, your actual filing status — which is the mechanism, whatever it turns out to be worth on your year.

Can I get the refund released without filing?

No. There is no form for it and no appeal at this stage. The hold exists because a year is unresolved, and filing is what resolves it.

What if I can't file by the date on the notice?

File as soon as you can. That date is when the IRS may begin computing the year itself; it is not a deadline that forfeits a right, and the IRS will still accept a return afterwards.

What's the difference between this and a CP88?

Very little in substance. Both hold a refund pending an unfiled year. The wording differs on one point: a CP63 says the IRS may determine your tax for you, and a CP88 says it will. The CP88 page covers that version.

One question decides whether this needs anyone

Is the missing year a W-2 year?

If yes — a job, maybe some bank interest, nothing else — then this is a straightforward late return, the transcript rebuilds most of it, and you do not need a CPA. There is free filing help staffed by IRS-certified volunteers: VITA, for people who generally make $69,000 or less, for people with disabilities, and for limited-English-speaking taxpayers; and TCE, for people aged 60 and older. ⚠️ Check one thing before you go: whether the site prepares returns for earlier years. These programs are built around the current season and prior-year scope varies.

The answer is no, or "sort of," in these situations — and this is the list:

Self-employment or cash income in the missing year. The transcript shows what was reported, and what nobody reported is where the return actually gets decided.
A property sale, a retirement distribution, or canceled debt on the transcript. Each arrives as a gross figure with no basis and no exclusions, and each looks far worse on a transcript than it usually is in reality.
Several missing years, not the one on the notice, where the order matters and one may be close to expiring.
A business in the missing year, particularly with employees.
A joint year where the other person is no longer available, through separation, death or estrangement.

If you are not sure which of those you are, that is a short conversation rather than an engagement — it is answered by what is on the transcript, and reading a transcript for that purpose takes minutes rather than hours.

On what usually stops people calling about an old unfiled year, and it is not the tax.

The call is confidential and nothing is filed or sent to the IRS without your authorization. You can find out whether your year is the simple kind and then handle it yourself, and that is a normal way for one of these calls to end.

There is a real office behind this — 240 Blossom Park Drive, Suite 3, Georgetown, Kentucky, twenty minutes from Lexington.

Here: Katherine works the account herself and you are not handed to a case manager. The first thing that happens is the transcript for the missing year, because it decides everything else. And if it is a W-2 year, that is what you are told on the first call.

The first call is free, it is thirty minutes, and there is no obligation at the end of it. Two things start it: the year being held and the year that is missing.

This page explains how IRS notices and the rules behind them generally work. It is not tax or legal advice about your situation, and reading it does not create a client relationship. Figures are current as of the last-reviewed date above.

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