What to do when you receive an IRS notice

January 6, 2022
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Let's take a look at different notices the IRS could potentially send you, their implications, and what to do if you receive one of these notices.

Why is the IRS notifying you?

There are millions of notices sent out by the IRS each year, and they can range from something as simple as the IRS wanting to clarify information to a notice that you have been selected for an audit.

Here are a few of the most common IRS notices:

  • CP2000– This notice lets a taxpayer know that there is a difference between what the taxpayer reported on their return and what was reported to the IRS.
  • CP14– This is a notice of a balance due. If you receive this, it means the IRS believes you have not paid your total tax liability.
  • CP2501– This notice is the IRS requesting clarification on the information presented on your return because it does not match the information they have on file.
  • LTR 3219– This notice is sent when the IRS determines that a taxpayer has underpaid and owes additional taxes.
  • LTR 2205– There are two versions of this form, A & B, for individuals and businesses respectively. This notice lets a taxpayer know that they have been selected for an audit.

What should you do when you receive a notice?

The first thing to do when you receive a notice is to read it carefully. In a lot of cases, you don’t even need to respond to one of these notices unless there are specific instructions to do so. For example, if you receive a CP2000 you only need to respond if you disagree with the adjustment being made. The notices will also have instructions on how to respond if a response is required. If you are still unsure what to do after reading a notice you can always reach out to your CPA or Tax Professional for guidance on the next steps to take.

How do I know the notice is actually from the IRS?

Unfortunately, scams are a reality in the world today. Here a few things that you can look for to be sure that your notice is from the IRS and is not a scam.

  1. The IRS will initiate most of its contact through the mail. There are few scenarios where the IRS will call you first.
  2. The IRS will not:
  3. Demand that a specific payment method be used
  4. Demand immediate tax payment
  5. Threaten to involve local law enforcement
  6. Notices from the IRS will either have a notice number, CP, or a letter number, LTR. If you receive a notice that omits these, it could be fraudulent.

Notices from the IRS can be intimidating. Remember if you receive a notice, it could be for a variety of reasons with some being as simple as their need to clarify your information. You will always be given ample time to evaluate what the notice is saying and respond if applicable. Make sure to read the notice carefully, and if you are still unsure you can contact your CPA or Tax Professional.