A C-Notice is an IRS notification sent to Coinbase indicating that a taxpayer has underreported interest or dividend income on their federal tax returns. Upon receiving this notice, Coinbase is legally required to apply backup withholding to any future eligible interest or dividend payments on the user's account.
What this means for your account
When a C-Notice is active on your account, backup withholding at 24% applies to future eligible payments. You have 30 days from the date of notification to provide Coinbase with an IRS-issued CP-542 stop notice before withholding begins.
Unlike a B-Notice, a C-Notice cannot be resolved by submitting or updating your Form W-9. The only way to stop C-Notice withholding is to obtain a CP-542 stop notice directly from the IRS.
What you need to do
Contact the IRS to request a CP-542 stop notice. Coinbase cannot issue or expedite this notice on your behalf.
Once Coinbase receives confirmation of an IRS-issued CP-542, backup withholding stops on future eligible payments.
Withheld amounts
Amounts withheld are sent directly to the IRS and cannot be refunded by Coinbase. You may be able to recover withheld amounts when you file your annual federal tax return. Consult a tax professional for guidance.
Related articles
• B-Notice