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In the IRS’s own words · not reviewed by VALID
CP321K notice explained, in the IRS’s own words
This notice is to inform potentially impacted taxpayers they may be able to claim theft loss.
Read the full CP321K page on irs.gov ↗
What this notice is about
This notice is to inform potentially impacted taxpayers they may be able to claim theft loss.
What you need to do
To claim the theft loss you should:
- Report the interest income from the TreasuryDirect Form 1099-INT on your 2025 return.
- Complete Section B on Form 4684, Casualties and Thefts PDF, for income-producing property for the year you discovered the theft and received any recovery of funds.
Part I of Section B should be completed using the following information:
- The adjusted basis of the property on Line 20 is equal to the original investment plus the amount reported on Form 1099-INT.
- Any funds recovered must be reported as “other reimbursement” on Line 21.
- The fair market value before the theft on Line 23 should be the total redemption amount of the securities.
Part II of Section B should be completed with the loss(es) entered in column (b)(ii) and any final calculated loss reported on the indicated line of Schedule A, Itemized Deductions.
If you have already filed for the year and are able to claim a theft loss in that year, you should consider filing an amended return.
You may want to
Create or login to your Online Account to:
- View your balance
- Make and view payments
- View or create payment plans
- Access tax records
Login to your TreasuryDirect account to:
- Review the TreasuryDirect FAQs
- Determine how much money was recovered
Get an identity protection PIN (IP PIN). An IP PIN can help prevent misuse of your SSN or ITIN on fraudulent federal income tax returns.
When can I claim a theft loss?
You can claim a theft loss once you’ve recovered as much as you can. TreasuryDirect has informed us that they have recovered all the funds they are able to recover. Therefore, you may claim a theft loss for the tax year when you received a partial recovery of funds from TreasuryDirect or were informed that TreasuryDirect was unable to recover any funds on your behalf.
- Example 1: You received a partial recovery of funds in 2025 or were told in 2025 that TreasuryDirect was unable to recover any funds for your account. You can claim the theft loss on your 2025 tax return. If you already filed your return, you may file an amended return to claim the loss.
- Example 2: You received a partial recovery of funds in 2026 or were told in 2026 that TreasuryDirect was unable to recover any funds for your account. You can claim the theft loss on your 2026 tax return. Please note that you must still report the interest income from the TreasuryDirect Form 1099-INT on your 2025 tax return.
What to do next
- Write down the date on the letter today.
- Look the number up on irs.gov yourself. Don’t trust a link or phone number from anyone else.
- If it says you owe money or proposes changes to your return, take it to a licensed CPA, EA or tax attorney before that date.
Not advice. Not a filing. Verify with a licensed professional. Rules change by year and facts.