What to Do First When You Get an IRS Notice

The top right corner of every IRS letter has two pieces of information that matter more than the dollar figure on page one: a notice code (CP2000, CP14, LT11, Letter 525, etc.) and a response deadline. Write both on the envelope and on your calendar.

The notice code tells you what kind of letter it is — a balance-due notice, an automated underreporter inquiry, a collection notice, or an audit. The deadline tells you how much time you have before your options narrow.

It is tempting to make the problem go away by paying. Don't. Many notices are based on incomplete IRS information — a missing 1099, a Schedule D summary that didn't transmit, a return the IRS hasn't fully processed.

Paying first and disputing later is much harder than disputing first and paying after. The IRS treats payment as agreement with the assessment. If the assessment is wrong, you've just shifted the burden of proof from the IRS to yourself.

Find the return as filed, every W-2 and 1099 the IRS could have received, all brokerage statements, and any K-1s. Lay them next to the notice and compare line by line.

Most CP2000 notices, for example, are resolved by showing the income was already reported — just under a different line, a different name (joint vs. single account), or a different cost basis. The documents do the work; the letter is just the conversation starter.

Even if your only response is a request for more time, file it in writing and keep proof of mailing. A timely response preserves rights; a missed deadline forecloses them and often turns a $4,000 question into a $40,000 problem.

Send any substantive response by certified mail with return receipt, or upload through the IRS online account when the notice allows. Phone calls do not count as responses for deadline purposes.

Long, defensive cover letters, photocopies of every record from the year, and explanations of why the IRS is wrong about everything are common — and they almost always make things worse. Answer only what the notice asks, in the format it asks, and stop there.

If you genuinely cannot meet the deadline, request an extension in writing. The IRS grants reasonable extensions routinely; what they will not forgive is silence.

Bring in a representative (CPA, EA, or tax attorney) when the proposed amount is over $10,000, when there's a lien or levy, when the notice is an audit (Letter 2205, Letter 525), or when the year involved has missing records.

Representation also matters when the notice references a business return, a multi-year issue, or a state-level cross-reference. The cost of representation is almost always smaller than the cost of mishandling those situations alone.

Ignoring the letter because it looks like junk mail. Calling the IRS angry, on speaker, without your documents in front of you. Sending payment without a written response. Missing the 30-day or 90-day window stamped on the notice. Letting a spouse handle it because the issue is 'theirs' when both names are on the return.