Receiving a letter from the IRS is stressful, but most notices are routine. Learn what each type means and what to do.
Getting a letter from the IRS is one of those things that makes people's stomachs drop. I understand the reaction. But after years of handling IRS correspondence for clients, I can tell you that most notices are routine and many are easily resolved. The key is knowing what you are looking at and responding appropriately.
The first and most important rule is this: do not ignore it. The IRS sends notices with deadlines. Ignoring a notice that could have been resolved with a short letter can escalate into a lien, a levy, or collections action. Whatever the notice says, read it, note the deadline, and reach out to a tax professional if you are not sure how to respond.
The CP2000 is one of the most common notices people receive. It is not an audit. The IRS received a 1099 or W-2 that does not match what you reported, and they are proposing a change. You have the right to agree, partially agree, or disagree with documentation. If the income was genuinely unreported, you will owe the additional tax plus interest. If you believe the IRS is wrong, you can respond in writing with supporting documents.
The CP501, CP503, and CP504 are balance due reminders in escalating order. The CP504 is serious because it is the final notice before the IRS begins collection action. If you receive a CP504, contact a tax professional right away.
The LT11 or Letter 1058 is a final notice of intent to levy. This means the IRS is preparing to seize wages, bank accounts, or other assets. You have 30 days to respond and request a Collection Due Process hearing. Do not wait.
The CP05 simply means the IRS is reviewing your return before issuing your refund. It is not an audit. Most CP05 reviews resolve within 60 days without any action from you.
If you receive a Letter 531 or CP3219A, also called a Statutory Notice of Deficiency, you have 90 days to dispute the proposed changes in Tax Court. This is a hard deadline. Missing it means the IRS assesses the additional tax automatically.
LT11 or Letter 1058 — Final notice of intent to levy. This is serious. The IRS is preparing to seize wages, bank accounts, or other assets. You have 30 days to respond and request a Collection Due Process hearing. Do not wait.
CP90 — Notice of intent to seize property. Similar urgency to LT11. Respond immediately and engage a tax professional with IRS representation experience.
CP05 — Your return is being reviewed. This notice says the IRS is reviewing your return before issuing your refund. It does not mean you are being audited. The review typically resolves within 60 days without any action required from you.
Letter 531 or CP3219A — Statutory Notice of Deficiency. This notice gives you 90 days to dispute the proposed tax changes in Tax Court. If you don't respond within 90 days, the IRS will assess the additional tax. This is a critical deadline.
What a tax professional does when you receive a notice
A CPA or Enrolled Agent reviews the notice, identifies the issue, and develops a response strategy. In many cases, the response is a simple letter with supporting documentation. In more complex cases — audits, collection actions, offers in compromise — representation before the IRS is essential.
Enrolled Agents have unlimited practice rights before the IRS, meaning they can represent you in any matter at any IRS office. This is a meaningful advantage when your situation requires direct IRS interaction.
At SureEdge Tax & Accounting, we handle IRS notices and representation for our clients. If you've received a notice and are unsure how to respond, contact us for guidance.