Got a letter from the IRS? A calm, step-by-step response plan

First, breathe — then read the whole thing

An envelope from the IRS gets your attention. But the large majority of IRS letters are not audits. They’re requests for information, notices of a math adjustment, balance reminders, or confirmations that something was received or changed.

Read the entire letter before reacting. Look for four things: the notice or letter number (usually in the top or bottom right corner, starting with CP or LTR), the tax year, the amount involved, and the response date. Those details tell you almost everything about what you’re dealing with and how much time you have.

Then put the letter somewhere you won’t lose it. The tear-off stub and the exact notice date both matter later.

Confirm it’s actually from the IRS

Scammers imitate IRS letters, calls, and texts. The IRS says its first contact usually comes by mail. It emails or texts only if you’ve opted in, it doesn’t contact people through social media, and contact that is unexpected, rushes you, threatens you, or demands immediate payment is a warning sign. Payments to the IRS go to the U.S. Treasury, never to a gift card, crypto wallet, or individual.

To verify, log in to your IRS online account at irs.gov and look for the notice or balance, or call the IRS using a number from irs.gov itself — not a number printed on a letter you’re unsure about. If someone shows up in person, IRS employees carry two forms of official credentials, and you’re entitled to see both. Your tax professional can also pull your IRS transcripts to confirm what’s on file.

Common notices, decoded

These are the letters business owners and professionals see most often. The number tells you where you are in the process.

• CP2000 — Third-party forms (W-2s, 1099s) don’t match your return. It proposes changes and is not a bill, but you must respond by the date on the notice.
• CP14 — You have a balance due. This is the first bill.
• CP501 and CP503 — Reminders that the balance is still unpaid, with interest and penalties growing.
• CP504 — Notice of intent to levy. The IRS can begin taking state tax refunds and may file a federal tax lien. It’s serious, but it is not the final notice.
• LT11 or Letter 1058 — Final notice of intent to levy. This one carries Collection Due Process rights with a 30-day window.
• Letter 3172 — Notice that a federal tax lien has been filed, also with a 30-day window to request a hearing.
• CP3219A — Statutory notice of deficiency, the “90-day letter.” Your window to take the dispute to Tax Court.

Your step-by-step response

Once you know it’s genuine, work through it methodically.

• Calendar the deadline, counting from the date on the notice, not the day you opened it.
• Pull the return for that year and compare it line by line with what the IRS says changed.
• Decide whether you agree, partly agree, or disagree.
• If you agree, follow the instructions: sign and return the response form and pay, or set up a payment plan if you can’t pay in full.
• If you disagree, respond in writing by the deadline with a short, specific explanation and copies (never originals) of supporting documents.
• Include the notice or its tear-off stub so your reply is matched to the right case.
• Use the IRS document upload tool if the notice offers it, or fax or trackable mail, and keep a copy of everything you send.
• If you need more time, call before the deadline and ask. Silence is treated as agreement.

A worked example: the CP2000 that isn’t really a problem

A physician with a side consulting practice receives a CP2000 for 2024 proposing several thousand dollars of additional income and self-employment tax. The IRS says a $24,000 Form 1099-NEC from a medical device company wasn’t reported.

It was reported — it’s included in the $61,000 of gross receipts on her Schedule C. The IRS system just can’t see inside that total. Her response: check “disagree,” write a one-paragraph explanation, and attach a simple reconciliation showing each 1099 and deposit that makes up the $61,000, with the $24,000 highlighted.

That kind of response typically closes the matter with no change. The mistake would have been ignoring the notice or paying it because the number looked official. If the IRS had been right, the better move would have been to agree promptly, since interest keeps running until the balance is paid.

Letters that deserve extra care

A statutory notice of deficiency (CP3219A and similar letters) is the most time-sensitive notice most people ever receive. You generally have 90 days from the date of the notice to petition the U.S. Tax Court, or 150 days if the notice is addressed to you outside the United States. The IRS is explicit that the deadline can’t be extended, and the Tax Court can’t hear a late petition. If you don’t act, the IRS assesses the tax and sends a bill.

Collection notices carry their own clocks. After an LT11, Letter 1058, or Letter 3172, you have 30 days to request a Collection Due Process hearing on Form 12153. That hearing is where you can propose a payment plan or other alternative, and it preserves your right to Tax Court review of the outcome. Miss the window and your options narrow.

An audit letter asking you to schedule an appointment or mail records is also worth slowing down for. Answer only what’s asked, send organized support, and consider representation before the first conversation.

If the letter says you owe and you can’t pay

Don’t let the inability to pay stop you from responding. The failure-to-pay penalty runs at 0.5% of the unpaid tax per month, up to 25%, and rises to 1% per month if the balance remains unpaid more than 10 days after a notice of intent to levy. Interest is added on top — for the fourth quarter of 2026, the IRS rate for individual underpayments is 7% a year, compounded daily.

Individuals who owe $50,000 or less in combined tax, penalties and interest can usually set up a payment plan online in minutes, and a short-term plan of up to 180 days is available for balances under $100,000. Setting one up early keeps the account out of the levy track.

When to bring in help

You can handle a simple notice yourself, especially one that corrects an obvious error. But if the amount is significant, the letter involves an audit or a notice of deficiency, or you’re not sure what it’s asking, get a CPA, enrolled agent, or tax attorney involved early. With a signed Form 2848, they can talk to the IRS on your behalf and receive copies of your notices.

When Tally Tax picks up a notice, the first steps are the same ones above: confirm it against your transcripts, identify the notice type and deadline, and trace the IRS’s number back to your return before anyone agrees to anything. If the IRS process itself has stalled or is causing hardship, the Taxpayer Advocate Service is another avenue.

The one thing never to do is ignore it. Unanswered notices don’t go away; they escalate, and you lose options along the way.

Frequently asked questions