What to Do When You Receive an IRS Letter
Don’t panic! Most IRS letters are routine correspondence that can be resolved quickly. Here’s your step-by-step guide to responding properly and protecting your interests.
90% of IRS letters can be resolved without professional help if you respond properly and on time. The key is staying calm and following the correct procedures.
Key Takeaway
Your First 10 Minutes: Stay Calm and Assess
Receiving an IRS letter can be scary, but remember: the IRS sends out millions of letters each year, and most are routine correspondence about minor discrepancies or missing information. Your situation is likely much less serious than you think.
Most IRS letters are not collection notices or audit notifications. They’re often simple requests for clarification or notification of minor adjustments to your return.
Take a Deep Breath
Common Types of IRS Letters
Understanding what type of letter you received helps determine the appropriate response:
High
CP2000: Underreported Income Notice
IRS believes you didn’t report all income on your tax return
Critical
CP504: Intent to Levy Notice
Final notice before IRS begins collection action
Critical
CP90/297: Intent to Levy Notice
Final notice of intent to levy and your right to a hearing
Your Step-by-Step Response Plan
01
Take a deep breath and read the entire letter carefully. Most IRS letters are not as serious as they initially appear.
Don't Panic - Read Carefully
- Action Steps:
- Read the letter completely
- Note the notice number
- Check the tax year mentioned
- Identify what action is required
02
Compare the IRS information with your records to determine if their calculation is correct.
Verify the Information
- Action Steps:
- Gather your tax returns
- Review supporting documents
- Check for discrepancies
- Calculate any differences
03
Decide whether you agree, partially agree, or disagree with the IRS assessment.
Determine Your Response
- Action Steps:
- If you agree: pay the amount due
- If you disagree: prepare to respond
- If partially agree: pay agreed portion
- Document your position
04
Take action before the deadline specified in the letter to avoid additional penalties and interest.
Respond Within Deadline
- Action Steps:
- Note the response deadline
- Send response via certified mail
- Keep copies of everything
- Follow up if needed
Critical Do's and Don'ts
DO These Things
- Read the entire letter carefully
- Respond by the deadline specified
- Keep copies of all correspondence
- Send responses via certified mail
- Gather supporting documentation
- Contact a tax professional if uncertain
- Pay any undisputed amounts
- Maintain detailed records
DON'T Do These Things
- Ignore the letter hoping it will go away
- Panic or make hasty decisions
- Send cash payments
- Provide unnecessary personal information
- Sign documents you don't understand
- Miss the response deadline
- Argue with IRS representatives
- Handle complex issues alone
Sample Response Letter Template
If you need to respond in writing to an IRS letter, here’s a professional template you can adapt:
[Your Name]
[Your Address]
[City, State, ZIP Code]
[Date]
Internal Revenue Service
[Address from IRS Letter]
RE: Notice [Notice Number] – SSN [Your SSN] – Tax Year [Year]
Dear IRS Representative,
I am writing in response to your notice dated [Date] regarding my [Year] tax return. After reviewing the notice and my records, I [agree/disagree/partially agree] with your assessment.
[If disagreeing]: I believe there is an error in your calculation because [explanation]. I have attached supporting documentation including [list documents].
[If agreeing]: I agree with your assessment and have enclosed payment for the full amount due of $[amount].
Please update my account accordingly and send me a confirmation of any changes made.
Thank you for your attention to this matter.
Sincerely,
[Your Signature]
[Your Printed Name]
[Your Address]
[City, State, ZIP Code]
[Date]
Internal Revenue Service
[Address from IRS Letter]
RE: Notice [Notice Number] – SSN [Your SSN] – Tax Year [Year]
Dear IRS Representative,
I am writing in response to your notice dated [Date] regarding my [Year] tax return. After reviewing the notice and my records, I [agree/disagree/partially agree] with your assessment.
[If disagreeing]: I believe there is an error in your calculation because [explanation]. I have attached supporting documentation including [list documents].
[If agreeing]: I agree with your assessment and have enclosed payment for the full amount due of $[amount].
Please update my account accordingly and send me a confirmation of any changes made.
Thank you for your attention to this matter.
Sincerely,
[Your Signature]
[Your Printed Name]
When You Need Professional Help
While many IRS letters can be handled personally, certain situations require expert assistance:
Get Professional Help If:
- The letter mentions "levy," "lien," or "collection action"
- You're being audited or examined
- The amount owed is substantial (over $10,000)
- You don't understand the letter or your options
- You've received multiple letters about the same issue
- The IRS is proposing penalties you believe are incorrect
- You need to negotiate a payment plan or settlement
IRS resolution specialists know the system, understand your rights, and can often achieve better outcomes than handling the situation alone. They can also represent you directly with the IRS, removing the stress from your shoulders.
Why Professional Help Matters
Preventing Future IRS Letters
The best way to handle IRS letters is to prevent them in the first place:
File Accurate Returns
Double-check all numbers and ensure all income is reported correctly.
File on Time
Even if you can’t pay, file your return by the deadline to avoid penalties.
Keep Good Records
Maintain organized records of all income, deductions, and supporting documents.
Work with a CPA
Professional tax preparation reduces errors and ensures compliance.
Need Help with an IRS Letter?
Don’t handle IRS correspondence alone. Our IRS resolution specialists can help you respond properly and protect your interests.
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