Overview

Receiving an IRS automated notice is not uncommon. These letters and notices are routine communications the IRS sends when automated systems detect a discrepancy, underpayment, or missing information related to your account. While the language can feel technical, every notice follows a pattern: it explains the issue, lists a notice code, gives a deadline, and tells you how to respond. Understanding that structure gives you control and reduces the chance that a small error becomes an escalated collection action.

In my practice as a CPA and financial educator, I’ve seen two common outcomes when people receive notices: (1) quick resolution after a calm, documented response; or (2) avoidable escalation because the taxpayer ignored the notice, missed a deadline, or responded without proper records. This guide provides practical steps you can use right away.

(Authoritative guidance: See IRS guidance on understanding notices and letters at https://www.irs.gov/individuals/understanding-your-irs-notice-or-letter and resources from the Taxpayer Advocate Service at https://www.taxpayeradvocate.irs.gov.)

How to read the notice: what to look for first

  • Notice code and letter type: At the top or in the header you’ll see a code (for example, CP2000, CP14, CP501). That code determines the action required and the typical timeline.
  • Tax year referenced: Verify the tax year the notice concerns; sometimes notices reference a different year than you expect.
  • Amount and reason: The notice will list any proposed change to tax, balance due, or required documentation.
  • Deadline: Look for the response or payment due date. These dates are binding for avoiding penalties or levy actions.
  • Response instructions: The method the IRS expects—mail, fax, online portal, or phone—and any specific forms or documentation to include.
  • Contact information and ID numbers: Use the phone number and notice ID shown on the letter if you need to call.

Verify authenticity before responding

Scams impersonating the IRS are common. Before sending personal information or payment, confirm the notice is genuine:

  • IRS letters are mailed to your address on file. The IRS will not initiate contact by email, text, or social media asking for immediate payment. (Official IRS guidance: https://www.irs.gov/newsroom/irs-issues-advice-about-telephone-scams)
  • Compare the notice number and format with official IRS examples on IRS.gov.
  • If you are unsure, call the phone number printed on the notice—not a number from a suspicious email or caller. If you suspect a scam, report it to the IRS at phishing@irs.gov.

Step-by-step response checklist (actionable)

  1. Read the notice fully and note the deadline. Don’t rely on memory.
  2. Confirm the tax year and the specific line items the IRS says are incorrect.
  3. Pull your tax return, W-2s, 1099s, receipts, bank records, and any supporting documents for the tax year cited.
  4. Compare the IRS’s claimed adjustments to your records. Mark where they agree and disagree.
  5. If you agree with the change and owe money:
  • Pay the balance or set up a payment plan (see IRS payment options). Submitting payment or contacting the IRS by the deadline prevents penalties and collection notices.
  1. If you disagree:
  • Prepare a clear, written response. State why the IRS is incorrect and attach copies (never originals) of supporting documents.
  • Include the notice ID and tax year on every page.
  • Mail via certified mail with return receipt if you send paper documents; keep copies.
  1. If you need more time:
  • Contact the IRS using the notice phone number to ask for an extension or explain delays. Document the call (date, time, rep name/ID).
  1. If the notice suggests a proposed adjustment (for example CP2000):
  • Use the response form provided with the notice or follow the instructions to respond online if available.

Common automated notice types & practical responses

  • CP2000 (Notice of Proposed Adjustment): Sent when IRS information (bank/1099) doesn’t match your return. Action: verify with payors and send matching documentation or agree and pay the additional tax. (More: IRS CP2000 guidance.)
  • CP501 / CP503 (Balance due progression) and CP14: Early notices for unpaid taxes. Action: confirm balance, make payment, or set up an installment agreement.
  • CP90/LP (Final Notice of Intent to Levy): Serious. Action: respond immediately and request a Collection Due Process hearing if eligible.

For more on notice codes and meanings, consult our Deciphering IRS Notice Codes guide and the CP2000 deep dive on FinHelp.io:

If you can’t pay the full amount

The IRS offers multiple options; do not ignore the notice:

  • Installment Agreement: Monthly payments. Apply online for many taxpayers or by following the instructions on the notice.
  • Offer in Compromise: For taxpayers who cannot pay the full amount and meet strict criteria.
  • Temporarily Not Collectible (Currently Not Collectible): For taxpayers facing financial hardship.

Apply as soon as possible; interest and penalties continue until the balance is resolved. See IRS payment options and applications on IRS.gov.

If you disagree and want to appeal

  • Follow the notice’s instructions exactly for disputing a proposed change. Include clear evidence and a concise explanation.
  • For collection actions, ask for a Collection Due Process (CDP) hearing within the timeframe shown on the notice; that preserves appeal rights.
  • If you are unsatisfied after IRS response, the Taxpayer Advocate Service can be an independent resource; find local TAS offices at https://www.taxpayeradvocate.irs.gov.

Additional guidance on how to dispute notices and when to file an amended return is available in our related posts:

Records and communication best practices

  • Keep digital and physical copies of all correspondence, proofs of mailing, and documents sent to the IRS.
  • Use certified mail with return receipt for important submissions; retain tracking and delivery confirmations.
  • When you call, write down the date, time, representative’s name and ID, and a summary of the conversation.
  • Never send original documents unless the IRS specifically requests them. Send clear, labeled copies.

When to engage a tax professional or authorized representative

Engage a CPA, EA (Enrolled Agent), or tax attorney when:

  • The notice involves large balances, potential liens/levies, or criminal exposure.
  • You need to request appeals or Collection Due Process rights.
  • The administrative burden or required documentation is beyond your comfort level.

To allow a tax professional to speak with the IRS on your behalf, complete Form 2848 (Power of Attorney). If you only want to receive information, use Form 8821 (Tax Information Authorization).

Common mistakes to avoid

  • Ignoring the notice or missing the deadline.
  • Over-sharing personal information to an unverified party.
  • Sending imperfect, disorganized responses that make it hard for the IRS to match documents to the notice.
  • Assuming the IRS is infallible; verify using your documents.

Case study (realistic example)

A client received a CP2000 proposing $4,200 in additional tax for unreported 1099 income. We compared his return to the 1099, found a duplicated entry and a misclassified partnership distribution. We prepared a concise response with copies of the 1099, bank statements, and an amended schedule. The IRS accepted the explanation and revised their adjustment downward, avoiding penalties. The key actions were a calm review, organized documentation, and a timely, paper-tracked response.

Quick reference (do this within 10 days)

  • Read the notice carefully and file it with your tax records.
  • Identify deadline and response method.
  • Pull supporting documents and compare line-by-line.
  • Call the number on the letter only if you need clarification or to request more time.

Resources and authoritative references

Professional disclaimer

This article is educational and general in nature and does not replace personalized tax advice. Tax rules change and may affect your situation. Consult a CPA, Enrolled Agent, or tax attorney for guidance tailored to your circumstances. In my practice, a timely, documented approach to IRS notices is the most reliable way to minimize cost and stress.

(Internal links used above point to FinHelp.io glossary pages on IRS notice codes, CP2000, appeals, and response timelines.)