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Letter 3718C: Fixing Your WOTC Claim Errors

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Last updated 11/11/2024 by
SuperMoney Team
Fact checked by
Ante Mazalin
Summary:
Letter 3718C is an IRS notice issued when a taxpayer has claimed excess tax credits under the Work Opportunity Tax Credit (WOTC). This notice aims to inform taxpayers of discrepancies in their claimed credits and provides necessary steps to correct the issue. Understanding the details of this notice and taking appropriate action can help avoid delays in tax filings and refunds.
Receiving any IRS notice can be a cause for concern, and Letter 3718C is no exception. This notice specifically relates to excess tax credits claimed under the Work Opportunity Tax Credit (WOTC). For taxpayers who have received this letter, it is essential to understand why it was issued and what steps need to be taken to resolve the issue. In this article, we’ll break down what Letter 3718C is, how it affects you, and the actions you need to take to address the situation promptly.

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What is letter 3718c?

Letter 3718C is issued by the IRS to taxpayers who have claimed excess tax credits under the Work Opportunity Tax Credit (WOTC). The WOTC is a federal tax credit available to employers who hire individuals from certain targeted groups, such as veterans, long-term unemployed individuals, and others facing barriers to employment. However, if the IRS identifies that a taxpayer has claimed more credits than they are entitled to, it will issue this notice.
The IRS issues Letter 3718C to notify the taxpayer about the excess credits and the need for corrections. The notice will detail the specific amount of credits that are in question and provide instructions for addressing the discrepancy. This communication serves as a prompt to correct the error and avoid further issues with the IRS, including delays in processing your tax return or receiving a refund.

Why did I receive letter 3718c?

There are several reasons why the IRS might issue Letter 3718C. The most common reason is that you may have inadvertently claimed more WOTC credits than you were eligible for. The IRS regularly reviews tax returns to ensure that credits are claimed correctly and that taxpayers do not receive more than their due share.
In some cases, clerical errors or incorrect data submitted with the claim might also trigger the letter. For instance, if there was a mistake in calculating the number of qualified individuals hired by the employer or if the required documentation was incomplete, it could lead to an excess claim. Additionally, the IRS may flag your claim if there are discrepancies between the tax return and the information on file from the employer’s certification.
Receiving this notice does not necessarily mean you are at fault. It could be the result of simple errors or misunderstandings that are easy to resolve.
Struggling with IRS notices? If you’ve received an IRS letter and aren’t sure how to handle it, you might want to explore professional tax relief options. Optima Tax Relief has helped thousands of people resolve their tax issues and get back on track with the IRS. Learn more about how they can assist you with your situation.

Pro tip

Always double-check the eligibility criteria for the WOTC before filing your tax return. Ensuring that you meet all the requirements can prevent errors and save you from receiving a letter like 3718C.

How letter 3718c affects you

When you receive Letter 3718C, it means the IRS has flagged your tax return for discrepancies in the WOTC claim. As a result, the IRS will either adjust the credit amount or ask you to provide additional documentation to prove your eligibility for the tax credit.
If you do not respond to the notice promptly, you may face delays in processing your tax return, and any refund due may be delayed until the issue is resolved. In some cases, the IRS may disallow the credits entirely if they determine that you are not eligible for the claimed amount, which could lead to an increased tax liability.
Additionally, failing to respond to the IRS in a timely manner could result in penalties or interest charges. Therefore, it is crucial to take the necessary steps to correct the situation as soon as possible.

What should you do when you receive letter 3718c?

If you receive Letter 3718C, it is important to follow the instructions carefully and take prompt action. Here’s what you should do:
  • Review the letter thoroughly to understand the exact nature of the discrepancy.
  • Ensure that the WOTC credits you claimed are accurate. Check your records to verify the number of eligible employees you hired during the tax year.
  • Collect any additional documentation requested by the IRS, such as certifications from your employer or supporting forms related to the WOTC claim.
  • If necessary, consult with a tax professional to help you understand the issue and provide guidance on how to correct the claim.
  • Respond to the IRS by following the instructions in the letter, submitting the corrected information and any requested documentation promptly.
By taking these steps, you can resolve the issue quickly and ensure your tax return is processed without further delays.

Pro tip

Maintain organized records of all certifications and forms related to the WOTC claim. This documentation is crucial if the IRS requests proof or if there’s a need to resolve discrepancies in your claim.

How to respond to letter 3718c

Steps to take when responding to letter 3718c

Responding to Letter 3718C requires a careful approach. Follow these steps to resolve the issue:
1. Review the notice: Begin by reading Letter 3718C carefully. It will include specific information about the excess credits and provide instructions on how to proceed.
2. Verify your claim: Double-check your WOTC claim and confirm the number of eligible employees you hired. Ensure all the required documentation, such as certifications from your employer, is accurate and complete.
3. Provide supporting documentation: If the IRS requests additional documentation, gather the necessary papers. This may include employee certification forms and other forms related to the WOTC claim. Be thorough in providing the requested documents to avoid delays.
4. Submit the corrected information: After reviewing your records, submit any corrected information or documentation to the IRS. If the notice requires you to submit a form, make sure to follow the provided instructions.
5. Keep a copy for your records: Always keep copies of the documents you send to the IRS. This will help you track your response and ensure that you have proof of your communication.
Once you’ve completed these steps, the IRS will review your submission and take appropriate action.

What happens after you respond to letter 3718c?

After you respond to Letter 3718C, the IRS will review the information you provided. If the documentation is sufficient and the issue is resolved, the IRS will process your tax return, adjusting the credit amount if necessary. In some cases, they may issue a notice confirming that the excess credit has been corrected, and you’ll receive your refund as expected.
However, if the IRS determines that you are not eligible for the claimed credits, they may disallow the excess amount. This could result in an increased tax liability and potentially delay your refund. If you disagree with their decision, you have the option to appeal the determination.

Further support options for addressing letter 3718c

If you are unsure how to proceed after receiving Letter 3718C, consider these resources:
  • Consult a tax professional for help in understanding the notice and ensuring you provide the correct documentation.
  • Contact the IRS directly through their support line for assistance with your specific situation.
  • Visit the IRS website for additional guidance on WOTC claims and how to resolve discrepancies.
  • Consider contacting a local IRS office or taxpayer advocate service if the situation becomes complex or if you encounter any roadblocks.

Pro tip

If you’re unsure about how to respond to Letter 3718C, consider consulting a tax professional. They can help you navigate the process, gather the correct documentation, and ensure that your response is accurate.

Potential penalties or consequences of not responding to letter 3718c

If you fail to respond to Letter 3718C, you may face several consequences:
  • Your tax return may remain unprocessed, which can delay your refund.
  • The IRS may disallow the excess tax credits, leading to an increased tax liability.
  • Interest and penalties may accrue on any unpaid taxes if the issue remains unresolved.
  • In rare cases, the IRS may take enforcement actions, such as garnishing wages or levying fines.
It is crucial to respond to Letter 3718C promptly to avoid these penalties and ensure the smooth processing of your tax return.
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Frequently asked questions

What is the work opportunity tax credit (wotc)?

The Work Opportunity Tax Credit (WOTC) is a federal tax incentive available to employers who hire individuals from certain targeted groups, such as veterans, long-term unemployed individuals, and recipients of public assistance. The purpose of the WOTC is to encourage employers to hire individuals facing barriers to employment. If you qualify, you can claim a tax credit, but it must be done accurately to avoid any errors like those addressed by Letter 3718C.

How do I know if I’ve claimed excess wotc credits?

Excess WOTC credits may be claimed if the number of eligible individuals hired is overstated or if the required certification forms and documentation were not properly submitted. The IRS reviews the data on your tax return and compares it with the records from your employer. If discrepancies are found, they will issue a notice like Letter 3718C to inform you of the excess credits. To prevent this, always ensure that your documentation and calculations are accurate before claiming the credit.

Can I appeal the decision made by the IRS in letter 3718c?

Yes, if you disagree with the IRS’s decision regarding the excess WOTC credits, you have the right to appeal. The IRS provides an appeals process that allows you to present your case and any additional supporting documentation. It’s essential to follow the instructions provided in the notice and submit your appeal within the deadlines specified by the IRS. Consulting with a tax professional can help ensure that your appeal is properly filed.

How long do I have to respond to letter 3718c?

The IRS generally expects a response to Letter 3718C within 30 days from the date the notice is issued. However, you should carefully read the notice to confirm any specific deadlines. Failure to respond within the given timeframe may result in penalties or disallowance of the claimed credits. Responding as quickly as possible helps prevent delays in processing your tax return or receiving your refund.

What should I do if I suspect identity theft caused the excess credits claim?

If you believe that identity theft is the cause of the excess WOTC credits, you should immediately contact the IRS and report the issue. The IRS may issue an Identity Protection PIN (IP PIN) to secure your tax account and prevent further fraudulent activity. Additionally, you may want to take steps to secure your personal information, such as placing a fraud alert with the credit bureaus and monitoring your credit report for suspicious activity. Working with the IRS and a tax professional is crucial to resolving this issue as quickly as possible.
Need help understanding other IRS letters and notices? Visit our comprehensive guide to IRS Letters and Notices or search for the document you received in the table below.
IRS Letter or Notice Number
Notice Description
CP01The IRS verified your claim of identity theft and will monitor your account.
CP01HThe IRS received a tax return with a social security number that belongs to a dead person.
CP02HMoney is due on an amended return based on a grant received due to Hurricane Katrina, Rita, or Wilma.
CP03CYou received the First-Time Homebuyer Credit for a house you purchased.
CP04You may be eligible for tax deferment because either you or a spouse served in a combat zone, a qualified contingency operation, or a hazardous duty station during the tax year specified on your notice.
CP08You may be entitled to additional money due to the Additional Child Tax Credit.
CP10Your tax return changed due to a miscalculation, and the refund you wanted to apply to an estimated tax payment has changed.
CP10AYour tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment has changed.
CP11You owe money because the IRS amended your return due to a miscalculation.
CP11AYour tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment also changed.
CP11MYour tax return changed due to a miscalculation of the Making Work Pay and Government Retiree Credit, and the refund you wanted to apply to an estimated tax payment has changed.
CP12You are due a bigger refund because the IRS corrected one or more mistakes on your tax return.
CP12AThe IRS made changes to correct the Earned Income Credit (EIC) claimed on your tax return.
CP12E or CP12FThe IRS corrected a miscalculation on your return.
CP12MThe IRS made changes to the computation of the Making Work Pay and/or Government Retiree Credits on your return.
CP12RThe IRS made changes to the computation of the Rebate Recovery Credit on your return.
CP13The IRS made changes to your return due to a miscalculation. There is no refund or amount due. Your balance is zero.
CP13AThe IRS made changes to your return due to a miscalculation of the Earned Income Credit. There is no refund or amount due. Your balance is zero.
CP13MThe IRS made changes to your return due to a miscalculation of the Making Work Pay credit or the Government Retiree Credit. There is no refund or amount due. Your balance is zero.
CP13RThe IRS made changes to your return due to a miscalculation of the Recovery Rebate Credit. There is no refund or amount due. Your balance is zero.
CP14You owe money on unpaid taxes.
CP16The IRS made changes to your return due to a miscalculation. The refund you were due was applied to other tax debts.
CP21AYou owe money due to the changes you requested that the IRS make on your tax returns.
CP21BYou are due a refund due to the changes you requested that the IRS make on your tax returns. The money should arrive within 2 to 3 weeks.
CP21CThe IRS made the requested changes to your tax return. You will not receive a refund, and there is no tax due. Your balance is zero.
CP21EAs a result of your recent audit, the IRS made changes to your tax return, and you owe money as a result of those changes.
CP21IThe IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes.
CP22AThe IRS made the changes you requested, and you owe money as a result.
CP22EAs a result of your recent audit, the IRS changed your tax return, and you now owe money.
CP22IThe IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes.
CP23The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You owe taxes due to these changes.
CP24The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes.
CP24EThe IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes.
CP25The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You are not due a refund, nor do you owe any money. Your balance is zero.
CP31You need to update your address because your refund check was returned to the IRS.
CP45The IRS was unable to apply your overpayment to your estimated tax as you requested.
CP49The IRS used all or part of your refund to pay a tax debt.
CP53Your refund check will be sent by mail because the IRS can’t provide your refund through direct deposit.
CP57The bank declined your payment, so the IRS was unable to draft funds from your bank account.
CP71A reminder of the amount you owe in tax, penalty, and interest.
CP71AA reminder of the amount you owe in tax, penalty, and interest.
CP71CA reminder of the amount you owe in tax, penalty, and interest.
CP71DA reminder of the amount you owe in tax, penalty, and interest.
CP88The IRS is holding your refund because you haven't filed one or more tax returns, and it believes you will owe tax.
CP90The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy in a Collection Due Process hearing.
CP91The IRS will levy up to 15% of your social security benefits for unpaid taxes.
CP120The IRS needs documentation of your tax-exempt status.
CP120AYour organization’s tax-exempt status has been revoked because it failed to file a Form 990 series return for three consecutive years.
CP130You may no longer need to pay the Alternative Minimum Tax (AMT) because your tax return filing requirements changed.
CP152The IRS received your return.
CP153The IRS will send your refund by mail because your direct deposit did not go through.
CP161You have an unpaid balance due to the IRS.
CP166Your monthly payment to the IRS did not go through due to insufficient funds in your bank account.
CP178You may no longer owe excise tax because your tax return filing requirements changed.
CP231You need to update your address because your refund was returned to the IRS.
CP259You did not file the business tax return identified in the notice.
CP259AYou should have filed these forms but did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax, or Form 990-N (e-Postcard).
CP259BThe IRS requires you to file these forms but did not – Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation.
CP259CThe IRS believes that you are a private foundation, but did not file the required Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation.
CP259DYou must file this form, but you did not – Form 990-T, Exempt Organization Business Income Tax Return.
CP259EYou should have filed this form, but you did not – Form 990-N (e-Postcard) or Form 990/990-EZ, Return of Organization Exempt From Income Tax.
CP259FThe IRS requires you to file this form but did not – Form 5227, Split-Interest Trust Information Return.
CP259GThe IRS requires you to file this form, but you didn’t – Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations.
CP259HAs a tax-exempt political organization, you must file this form, but you did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax.
CP276AYou submitted your tax liability schedule incorrectly. The IRS typically charges a Federal Tax Deposit (FTD) penalty for this but did not this time.
CP276BThe IRS did not receive the correct amount of tax deposits. It normally charges a Federal Tax Deposit (FTD) penalty but did not this time.
CP297The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing.
CP297AThe IRS has levied your assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing.
CP298The IRS notifying you of its intent to levy up to 15% of your social security benefits for unpaid taxes.
CP501You have a balance due on one of your tax accounts.
CP503You have an unpaid balance on one of your accounts, and the IRS has not heard from you.
CP504You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy your state income tax refund to apply it to the amount you owe.
CP504BYou have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy certain property or rights to property to apply it to the amount you owe.
CP521A reminder that you have an installment agreement payment due.
CP523You have defaulted on your payment agreement. Therefore the IRS is terminating the agreement and will levy your assets.
CP601Usted tiene un saldo pendiente de pago (dinero que le debe al IRS) en una de sus cuentas contributivas.
CP603No hemos recibido respuesta de parte de usted y todavía tiene un saldo sin pagar en una de sus cuentas contributivas.
CP604Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará cualquier reembolso de impuestos estatales al que tenga derecho y aplicarlo al pago de su deuda.
CP604BUsted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará ciertas propiedades o derechos de propiedad y lo aplicará al pago de su deuda.
CP621Este aviso es para notificarle que usted tiene un plan de pagos a plazos vencido. Por favor, envíe el pago inmediatamente.
CP623Este aviso es para informarle nuestra intención de cancelar su plan de pagos a plazos y confiscar (embargar) sus bienes. Usted incumplió en su acuerdo.
CP711Nosotros realizamos cambios a su planilla debido a que entendemos que hubo un cálculo erróneo. Como resultado de estos cambios, usted adeuda dinero por sus contribuciones.
CP721Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos.
CP722Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos.
CP771Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP772Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP773Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP774Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP959Usted no radicó su planilla de contribución de negocios identificada en este aviso.
CP2000The income or payment information on file doesn’t match your tax return. The discrepancy may result in an increase or decrease in your tax due.
CP3219AThe IRS has received information that is different from what you reported on your tax return. This may result in an increase or decrease in your tax.
CP3219NThe IRS didn’t receive your tax return, so it calculated your return based on the information received from employers, financial institutions, and others. If you want to challenge the proposed tax, you have 90 days from the date of this notice. If you are outside the country, you have 150 days.
Letter 0012CThe IRS needs additional information to process your tax return.
Letter 0484CThe IRS wants a completed
Letter 0525Updates you on proposed changes after an IRS examination. Any changes are explained and details the refund due or taxes owed.
Letter 531IRS Notice of Deficiency. The information the IRS received about you was different from what you reported on your return.
Letter 0668D(LP 68)The IRS released their levy.
Letter 0549CYour tax bill was paid.
Letter 0681CThe IRS accepted your payment proposal. However, this is not a formal Installment Agreement.
Letter 0757CYou did not adhere to the terms of your Installment Agreement.
Letter LT 11The IRS plans to seize your property or rights to property.
Letter 1058The IRS has not received your payment. It plans to seize your property or rights to property.
Letter 1615 (LT 18)You must respond to the IRS within 10 days of this notice regarding past due tax returns.
Letter 1737 (LT 27)Complete and sign Form 433F, Collection Information Statement.
Letter 1961CYour application for a Direct Debit Installment Agreement was declined. It explains why and what you need to do to qualify.
Letter 1962CYour application for a
Letter 2050 (LT 16)The IRS is trying to collect unpaid taxes from you from returns that have been filed or from returns that have not been filed.
Letter 2257CThe IRS is providing the payoff amount that you requested.
Letter 226-JAn IRS letter to large employers notifying them that they may be liable for an Employer Shared Responsibility Payment (ESRP).
Letter 2271CA request for an Installment Agreement has been approved. It explains the fees and how to qualify for a Low Income Fee Reduction. The letter may also request missing information.
Letter 2272CAn IRS letter explaining why your request to pay the balance due in installments was declined.
Letter 2273CA confirmation letter of your request to pay the balance due in installments. It contained the amount to pay, fees charged, and where to send payment. Instructions on how to apply for the Low Income Fee Reduction included.
Letter 2318CA response to a request to pay taxes due to payroll deductions. It also explains the fees that are charged.
Letter 2357CThe IRS is admitting that it did not send you the balance due notices that it should have.
Letter 2603CThe IRS accepted your installment agreement. The IRS will file a Notice of Federal Tax Lien on your personal property.
Letter 2604CThe IRS has accepted your request for installment payments. This IRS letter provides the monthly payment, the address where to send it, and the fees charged. The letter also provides instructions on how to apply for the Low Income Fee Reduction.
Letter 2761CThe IRS is requesting your combat zone service dates to ensure that it provides you with the special provisions and protection of the combat zone deferment. Copies of military orders or other documentation to support your time served may be requested. Civilians working in support of the Armed Forces may be required to provide a Letter of Authorization or a letter from their employer.
Letter 2789CAn annual reminder notice, as required by law, of the balance due to the IRS. It explains that penalties and interest continue to accrue until the balance is fully paid.
Letter 2840CConfirms your Installment Agreement request and includes the payment amount and due date. This IRS letter explains the fees charged for paying monthly and explains how to apply for the Low Income Fee Reduction (if you qualify).
Letter 3030CProvides an explanation of the tax, penalty, and interest still due on your account.
Letter 3127CA confirmation of your request to make a change to your Installment Agreement. This IRS letter explains the fees for the change. Changes can be to the payment amount or due date, or it can include additional liabilities.
Letter 3174A reminder of taxes due after the IRS has sent a Notice of Intent to Levy.
Letter 3217CThe IRS has accepted your request to pay the balance in installments. This IRS letter provides your payment amount, the due date, and fees charged. The letter also provides instructions on applying for the Low Income Fee Reduction (if you qualify).
Letter 3228 (LT 39)A request to pay the balance due within 10 days using the envelope provided.
Letter 3500The IRS has received your documents, and it needs additional time to review them.
Letter 3572Your Federal Income Tax Return has been selected for examination. The IRS auditor requests that you call to schedule an audit appointment.
Letter 4883CThe IRS received your federal income tax return but needs more information to verify your identity in order to process your tax return accurately.
Letter 4903 (LT 26)You must file your tax returns immediately. The IRS has previously contacted you, but it did not receive a response.
Letter LP 47The IRS is trying to locate the person identified in the letter and is requesting that you provide their new address.
Letter LP 59The IRS has not received a response to the notice of levy it previously sent.
Audit Letter 2205The IRS manages audits either by mail or through an in-person interview to review your records. The interview may be at an IRS office (office audit) or the taxpayer’s home, place of business, or accountant’s office (field audit).
Letter 915You recently underwent an audit, and the IRS informs you that you now owe taxes.

Key takeaways

  • Letter 3718C is issued when the IRS detects excess tax credits claimed under the WOTC.
  • Review the letter carefully and provide the necessary documentation to correct any discrepancies.
  • Consult a tax professional if you are unsure about how to proceed with your response.
  • Ignoring the notice could result in delays, penalties, or disallowance of the WOTC credits.

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