Understanding IRS notices: CP590 and CP590A

Two notices commonly associated with errors in claiming certain credits or filing statuses are CP590 and CP590A. Understanding how these notices tie into preparer due diligence rules helps tax professionals respond correctly and reduce the risk of penalties or repeat notices.

What are CP590 and CP590A notices?

CP590: A CP590 notice alerts a tax preparer that a return they prepared includes errors involving one or more of the following:

• Earned income tax credit (EITC)
• American opportunity tax credit (AOTC) 
• Child tax credit (CTC), Additional child tax credit (ACTC) or credit for other dependents (ODC) 
• Head of household (HOH) filing status

The CP590 IRS page reminds preparers of due diligence obligations under §6695(g) and Treasury Regulation §1.6695-2, and highlights issues that frequently result in errors.

CP590A: A CP590A informs the preparer that one or more returns they prepared are being audited. Like CP590, the notice is tied to EITC, AOTC, CTC/ACTC/ODC or HOH claims. Receiving a CP590A means the IRS will likely request supporting documentation to verify credit/status eligibility.

How tax professionals can respond to the notices  

Initial review and detection: Tax professionals should identify which credit or filing status triggered the notice. 

Client communication and guidance: Practitioners should explain what the notice means and outline next steps. 

• For CP590, clients need to understand that the IRS flagged potential errors. 
• For CP590A, clients should be informed that the return is under audit. 

Document collection and submission: Professionals assist clients in gathering the necessary documentation to support their claims. This includes verifying dependents, confirming student eligibility for education credits or ensuring accurate reporting of income. Proper documentation is essential for a successful response.

Due diligence and prevention: Professionals can prevent future notices by maintaining thorough intake procedures, updating practice checklists, and asking clarifying interview questions when clients claim sensitive credits or statuses. 

Follow-up and resolution: During and after the IRS review, the preparer should assist in preparing responses, tracking correspondence, and explaining the outcome to the client. 

Common mistakes to avoid

Tax professionals can reduce the likelihood of receiving a CP590 or CP590A notice by avoiding these common errors: 

•          Assuming eligibility without verifying facts, especially for EITC or HOH
• Failing to maintain or request documentation such as Forms W-2, 1099 or 1098-T 
• Misunderstanding HOH requirements, including residency of a qualifying person 
• Omitting or misreporting income or expenses that affect credit eligibility 
• Not adhering to due-diligence requirements in §6695(g)

Avoiding these errors supports accuracy, compliance and improved outcomes during IRS review and day-to-day due diligence.

What’s next?

Understanding CP590 and CP590A notices is crucial for tax professionals. CP590 alerts the preparer to potential filing issues, while CP590A signals an active audit. Both require timely review, accurate documentation and effective communication. By responding quickly and applying strong due diligence procedures, tax professionals can protect their ethical interests and reduce future IRS concerns.

Sign up for our NATP due diligence webinars to learn more about how important reviewing documentation can be for your clients, Ethics and Due Diligence Requirements of Tax Preparation (free for members!)