Quick overview
IRS notices are the agency’s primary way of communicating specific issues about a taxpayer’s account — from simple reminders to final collection warnings. The notices are coded (CP, LT, etc.) so IRS employees and taxpayers can quickly identify the topic and required action. Responding promptly and correctly to the right code avoids penalties, stops collections, and preserves appeal rights.
Sources: IRS guidance on notices and letters (https://www.irs.gov/payments/understanding-your-irs-notice-or-letter).
How CP and LT letters differ
- CP notices (Correspondence Program) are the most common. They range from informational messages (billing, balance due, reminders, or proposed changes) to requests for documents.
- LT letters are generally sent when the account has moved into an elevated collection or legal status. They often precede enforced collection actions such as liens, levies, or asset seizures.
In plain terms: treat a CP notice as an instruction or request you can usually resolve with documentation or payment; treat an LT letter as a signal that you must act now to avoid enforced collection.
Common CP notices and what to do
Below are typical CP codes you may see and practical next steps.
-
CP14 — Notice of Balance Due
-
Meaning: The IRS states a balance on your account.
-
Action: Review the notice, match it to your tax return and IRS payment records. If you agree, pay or set up a payment plan. If you disagree, follow the notice instructions to dispute.
-
CP501 — Reminder Notice
-
Meaning: A follow-up for a past-due balance.
-
Action: Don’t ignore. Confirm the debt and either pay, request a short extension, or contact the IRS to discuss options.
-
CP2000 — Proposed Changes (Underreported Income)
-
Meaning: The IRS matched third-party information (W-2, 1099) against your return and proposes additional tax.
-
Action: Compare the IRS report with your copies of W-2s/1099s. If the IRS is correct, accept and pay or set up a plan. If incorrect, respond in writing with supporting documents per the notice. This notice does not mean you are under audit but does require a formal response.
-
Further reading: FinHelp’s deep dive on CP2000 (https://finhelp.io/glossary/irs-notice-cp2000-underreported-income/).
-
CP503 / CP504 — Escalating Collection Notices
-
Meaning: These are successive notices warning of impending enforced collection (CP504 is often described as the “final notice before levy”).
-
Action: Immediately contact the IRS or a tax professional. Explore installment agreements, currently not collectible status, or request a collection due process hearing if eligible.
-
CP90 / CP91 — Final Notice of Intent to Levy
-
Meaning: The IRS intends to levy (seize) bank accounts or wages if you do not act.
-
Action: Act quickly. You may have appeal rights (a Collection Due Process hearing) or can halt collection by setting up a qualifying payment arrangement.
Reference: IRS “Understanding Your Notice or Letter” (https://www.irs.gov/payments/understanding-your-irs-notice-or-letter).
Typical LT letters and why they matter
LT letters are issued when a case moves into the agency’s legal/collection track. Examples include:
-
LT11 — Final Notice of Intent to Levy (commonly used by IRS collection functions)
-
Meaning: A formal, advanced notice that levy or seizure is imminent if the debt is not resolved.
-
Action: Immediate contact is required. You can request a Collection Due Process hearing (if eligible) or quickly secure a direct-pay solution (full payment, installment agreement, or proof of hardship).
-
LT16 and related LT-series letters
-
Meaning: These are other collection-stage notices that may precede lien filing, seizures, or legal referrals.
-
Action: Treat LT letters as high priority. Legal counsel or a qualified tax representative can protect rights and negotiate alternatives.
Note: The exact LT code list and wording can vary; always read the specific notice you receive for deadlines and appeal rights.
Step-by-step: How to respond to any IRS notice
- Read the whole notice. Note the IRS contact info, deadlines, and whether the notice asks for payment, documents, or both.
- Don’t panic. Most notices are resolvable.
- Verify authenticity. The IRS mails most formal notices (not by text or social media). If you receive a threatening phone call, hang up and call the IRS at the official number on IRS.gov.
- Gather documentation. Pull your tax return, W-2s, 1099s, bank statements, and any correspondence that addresses the IRS’s issue.
- Choose a resolution path:
- Pay the balance in full (if possible).
- Set up an installment agreement (IRS online or by phone).
- Request Currently Not Collectible (temporary hardship) status.
- File an appeal or request an audit reconsideration if you disagree.
- Submit missing or corrected information per the instructions.
- Keep records of everything you send (certified mail or trackable delivery). Use the IRS-provided address on the notice — not a previously used one.
- If the notice is collection-focused (CP90, LT11), consider immediate professional help.
For a procedural checklist, see our guide on how to respond (https://finhelp.io/glossary/how-to-respond-to-an-irs-notice/).
Timelines and deadlines to remember
Notices will include a deadline — often 30 days for certain responses, but that can vary. Collection notices (final notices to levy or lien) frequently give a shorter window before the IRS takes action. If you miss a deadline, you may still have options (like seeking relief or filing an appeal), but your ability to stop a levy or lien may be limited.
If you receive a CP2000, you generally have 30 days from the date on the letter to respond. For final levies or LT-series letters, the timing to stop action can be measured in days.
Always read the date-specific instructions on the notice and act before the deadline.
Scams — how to confirm a notice is real
Scammers often impersonate the IRS. Real IRS notices are mailed through the U.S. Postal Service (some initial contacts may be by letter only). The IRS will not demand immediate payment by gift card, cryptocurrency, or threaten arrest over the phone.
If you suspect a scam:
- Compare the notice to IRS examples at IRS.gov.
- Call the IRS using a number from IRS.gov, not the number provided in a suspicious message.
- Report scams to the Treasury Inspector General for Tax Administration (TIGTA) at https://www.treasury.gov/tigta/ and to the FTC.
IRS resources: https://www.irs.gov/newsroom/tax-scams-consumer-alerts
Options if you can’t pay in full
- Installment agreement: monthly payments can be set up online for many taxpayers.
- Offer in Compromise (OIC): settles tax debt for less than the full amount, appropriate for limited circumstances and requires financial disclosure.
- Currently Not Collectible: a short-term option if paying would cause significant hardship.
Each option has pros and cons. For collection notices, an installment agreement often halts an immediate levy if set up correctly; however, it may require a user fee and has eligibility rules.
Professional tips from practice
In my experience working with clients: immediate, organized responses reduce stress and cost. Key practices:
- Keep a dedicated folder for tax-year documents and IRS letters.
- Always respond in writing when disputing IRS findings and include clear evidence.
- When a notice threatens a levy or LT action, engage a tax professional or attorney quickly to preserve appeal rights.
Example: A client received a CP2000 showing underreported 1099 income. We compared 1099s, found a duplicate issuer, submitted corrected documentation within 21 days, and the proposed assessment was withdrawn. In another case, an LT11 arrived for an unpaid balance; setting up an installment agreement within days prevented a bank levy.
Frequently asked questions
Q: Are all IRS notices serious? A: No. Many are routine and informational. But always read and respond; some letters escalate if ignored.
Q: Can I call the number on the letter? A: Yes — that number is usually safe. If you got the contact info by phone or email first, confirm it on IRS.gov before calling.
Q: Do I need a lawyer? A: Not always. Tax professionals (CPAs, EAs, or tax attorneys) help in complex or collection-stage notices.
Useful authoritative links and internal resources
- IRS: Understanding Your IRS Notice or Letter (https://www.irs.gov/payments/understanding-your-irs-notice-or-letter)
- FinHelp: “Understanding IRS Notice Codes: A Plain-English Guide” (https://finhelp.io/glossary/understanding-irs-notice-codes-a-plain-english-guide/)
- FinHelp: “How to respond to an IRS notice” (https://finhelp.io/glossary/how-to-respond-to-an-irs-notice/)
- FinHelp: “IRS Notice CP2000: Underreported Income” (https://finhelp.io/glossary/irs-notice-cp2000-underreported-income/)
Final note and disclaimer
This article explains common IRS notice types (CP and LT letters) and is written for general educational purposes only. It is not legal, tax, or financial advice. For personalized guidance, contact a qualified tax professional (CPA, EA, or tax attorney) or the IRS directly. While I draw on 15+ years assisting clients with notices, your situation may require tailored counsel.
References: Internal Revenue Service — official guidance on notices and letters (https://www.irs.gov/).
