What it is
The letter's full IRS title is Information Return (Paper) Incomplete or Rejected for Processing/Instructions Enclosed: Form 1095, 1098, 1099, etc. It is generated by the Information Returns Processing sort function at the campus when a paper submission fails the review that precedes scanning. Electronic filers never receive it; a bad electronic file is rejected by IRIS or FIRE at upload. The returns it names are "temporarily unprocessable" (IRM 3.10.8.5.2): they have been received, date-stamped and set aside, but nothing from them has reached the Information Returns Master File.
IRM 3.10.8.4(1), 3.10.8.5.3 (Jan. 1, 2026); IRM 3.10.8.3.4(4); IRM 20.1.7.8.4.5.
What triggers it
IRM 3.10.8.5.2 lists the conditions that "require correspondence." In plain terms:
- The reviewer cannot tell what type of return it is, or the box titles differ from the official form of the same number.
- The kind of amount cannot be determined, or the amount itself cannot (the example given is a misplaced decimal point).
- Illegible data throughout the submission.
- The return "doesn't look like the official form": postcard-sized documents, more than three returns per page, or a divergent layout that would impede processing.
- The tax year cannot be determined, or is a year before the form existed. A current-year Form 1096 transmitting prior-year returns draws a letter if the year is unclear.
- Entries that cannot be separated for processing: a computer listing, several payees' data on one form, type too small to read.
- Several kinds of income on a single Form 1099 (dividends, interest and rents on one form, for example); the return is pulled and the payer contacted (IRM 3.10.8.5.2.1).
- Wage-type payments reported on a 1099: the payer is told to file a W-2 instead.
- Form 1095 series returns with no Form 1094 transmittal; real estate transactions on anything other than the official Form 1099-S; a 1099-QA or 5498-QA submission with half or more of the payee TINs missing.
Some rejections happen further down the line, at the scanner, and route back the same way: a Form 1096 with no detail returns behind it, a submission mixing form types under one 1096, or one containing prior- or subsequent-year returns (IRM 3.41.269.2.2, 3.41.269.8.6). What does not draw a letter is worth knowing too. Missing payee TINs are processed as normal without correspondence (IRM 3.10.8.8.3). Copies B, C or the state copy sent without a Form 1096 are destroyed with no letter at all (IRM 3.10.8.4). A Form 1096 transmitting only voided returns is simply not processed.
What the letter contains
The campus chooses from a menu of fill-in paragraphs (Exhibit 3.10.8-5), so the letter names a specific problem: "Please use the full-sized official forms," "You sent non-official forms," "You sent forms in portrait. Please resubmit in landscape," and so on. Two rules govern the rest. Staff must "insert the exact number of unprocessable returns including the transmittal on each Letter 1865-C sent," so the count on the letter is a count, not an estimate. And photocopies of your returns are enclosed only "if describing the issue alone appears not adequate or clear"; where several returns are bad, staff photocopy "the best return(s) representing the problem" and are told to "do whatever you must to reduce the need to send photocopies" (IRM 3.10.8.5.3). The penalty manual describes the same practice from its side: "only a sample of the unprocessable returns are returned to the filer to identify the problem. However, the filer is asked to resubmit the entire submission" (IRM 20.1.7.8.4.5).
So the letter may arrive with one photocopied 1099 and a count of four hundred. The count is what you owe back.
The original paper is never returned. It sits in a suspense file and is disposed of when you resubmit or when the 45 days run out. If you did not keep a copy of what you mailed, you are rebuilding the submission from your own records.
The 45-day rule
The campus keeps "the original suspense file until the payer resubmits correctly or for 45-calendar days, whichever comes first" (IRM 3.10.8.5.3). The date matters for lateness. "When a taxpayer replies within the 45-day timeframe to the Letter 1865-C ... use the date stamp, if present, on the original return to ensure the correct received date is captured" (IRM 3.10.8.3.4). A timely reply keeps the received date of the original filing, so a submission mailed in January and rejected in March is still a January filing if the fix arrives within the window. After the window: "If a reply is received after the no reply case is forwarded for penalty assessment, process the new complete submission with the actual received date of the response." The same returns become a late filing on the day the campus opened your envelope.
The letter itself carries a response date. Treat the earlier of that date and 45 calendar days from the letter as the deadline; the IRM's suspense clock does not wait for the letter's date if the two differ.
How to resubmit
- Fix the condition the letter names, on official scannable forms (or an identical substitute that meets Publication 1179), typed or printed in black, landscape, one form per sheet as issued. Red ink and light ink are non-scannable (IRM 3.10.8.4.1).
- Resubmit the entire submission the letter counts, not the sample enclosed, with a new Form 1096 for each form type. If the campus prepared a "dummy" 1096 for you last time, prepare a real one now.
- Attach a copy of the letter on top. The intake manual routes "Letter 1865-C ... attached to a taxpayer's response" to the IRP correspondence unit (IRM 3.10.8.3), which is where the suspense file is; without it the package can enter as a fresh, late filing.
- Mail it to the address on the letter, by a method that gives you a dated receipt. The penalty unit accepts only a registered or certified mail receipt as proof of a paper filing date (IRM 4.19.25.8.1).
- Keep a complete copy. The originals are disposed of on receipt of a good resubmission.
If part of the resubmission is still bad, the campus separates it: "Route the processable returns for Income IRP processing," and the box 3 count on the 1096 is adjusted to match (IRM 3.10.8.5.3). Unprocessable Forms 1099-R, 5498-ESA and 5498-SA in a resubmission are destroyed rather than suspended again.
If you do not reply
"If no reply is received, route the entire case file and the retention copy of the correspondence to the IRP Penalty Unit for manual penalty determination" in Philadelphia (IRM 3.10.8.5.3). The penalty is the failure-to-file-in-the-proper-format penalty under IRC 6721, "manually assessed by the Campus (CP 215 or CP 15 Notices). It is not preceded by a Notice 972CG" (IRM 20.1.7.8.4.5). There is no proposal stage and no 45-day reasonable-cause window before assessment; the first document after the 1865-C is the bill. "If processable returns are submitted beyond the date requested, the filer is subject to a late filing penalty," and returns still unprocessable at the year's processing cutoff are referred for the improper-format penalty.
An undeliverable letter does not pause anything. The campus checks for a forwarding sticker, researches a better address once, and if none is found disposes of "the letter and the suspended submission." A filer whose IRS address is stale can lose a submission without ever knowing a letter existed. Form 8822-B keeps the address current.
The withholding-only variant
A separate report flags submissions where federal income tax withheld is the only money amount on the return. Those returns are treated as unprocessable and draw a 1865-C with a photocopy of the report page (IRM 3.10.8.5.5). The fix is usually to report the income the withholding was taken from. If the filer resubmits incorrectly or does not respond, Forms 1099-G and 1099-R are destroyed; all other types go to the civil penalty unit. Note that on the scanning side, withholding-only 1099-NEC and 1099-MISC returns are also tagged for the fraud program (IRM 3.41.269.11.8), so a large batch of withholding-only forms draws attention beyond the letter.
Questions people ask
The letter says 300 returns are unprocessable but only enclosed two.
That is the procedure. The count is exact; the photocopies are samples "representing the problem." Resubmit all 300 with a new Form 1096.
Can I resubmit electronically instead?
Yes, and for a large count it is the better route. File the same returns through IRIS as originals, then reply to the letter stating that the submission was refiled electronically on the given date with the receipt ID. The suspense file is closed when the campus is satisfied; the electronic filing date is what the penalty unit will see.
We mailed the fix on day 44 and it arrived on day 50.
The manual keys the suspense clock to receipt, and the received-date rule to the reply being "within the 45-day timeframe." Send certified with return receipt and keep the postmark; if the case has already gone to the penalty unit, the receipt is your reasonable-cause exhibit.
Is the 1865-C the same as a CP2100?
No. A CP2100 concerns payee name/TIN mismatches on returns that were processed. A 1865-C concerns returns that could not be processed at all. A submission that draws a 1865-C never reaches the matching that produces a CP2100.