Received an IRS Notice? Here's Exactly What to Do Next

Opening a letter from the IRS can be alarming — but don't panic. Most IRS notices are routine and don't mean you're in serious trouble. Knowing how to read and respond to them quickly and correctly can save you from penalties, interest, and unnecessary stress.

Step 1: Don't Ignore It

The worst thing you can do is set the letter aside and hope it goes away. IRS notices have deadlines — typically 30 to 60 days to respond. Missing that window can result in additional penalties, loss of appeal rights, or escalation to collections.

Step 2: Identify the Notice Type

Every IRS notice has a number in the top right corner (e.g., CP2000, CP501, LT11). Here are the most common ones:

• CP2000: Income discrepancy — the IRS found income on your return that doesn't match what was reported by employers or financial institutions
• CP501 / CP503 / CP504: Balance due reminders, escalating in urgency
• LT11 / Letter 1058: Final notice of intent to levy — act immediately
• CP90: Notice of intent to seize assets
• CP12 / CP11: Math error adjustments — the IRS changed your return
• Letter 525 / 531: Audit notification

Step 3: Read It Carefully

The notice will explain:

• What tax year it applies to
• What the IRS believes you owe (or what they're questioning)
• The deadline to respond
• Your options (agree, disagree, request more time)

Compare it against your own tax records and any documents referenced in the notice (W-2s, 1099s, etc.).

Step 4: Determine If It's Correct

Sometimes the IRS is simply right — a math error, a missing form, or unreported income. Other times, they're missing information you have. Either way, your response matters.

• If you agree: Follow the payment or correction instructions in the notice
• If you disagree: Respond in writing with supporting documentation
• If you're unsure: Contact a tax professional immediately

Step 5: Know Your Resolution Options

If you owe and can't pay in full, you have options:

• Installment Agreement: Monthly payment plan directly with the IRS
• Offer in Compromise: Settle for less than the full amount owed (based on ability to pay)
• Currently Not Collectible: Temporary hardship status that pauses collections
• Penalty Abatement: Request removal of penalties if you have reasonable cause or a clean compliance history

Step 6: Get Professional Representation

For anything beyond a simple balance due or math error, having a qualified tax professional represent you before the IRS can make a significant difference in the outcome. With a signed Power of Attorney (Form 2848), we can communicate directly with the IRS on your behalf — so you don't have to.