Quick overview

Receiving an IRS notice can feel alarming, but most notices can be resolved without crisis if handled correctly. In my 15+ years advising individuals and small business owners, the same handful of errors show up repeatedly. This guide lists those mistakes, shows how to fix them step‑by‑step, and points you to authoritative resources so you can act confidently. For general IRS guidance, see the IRS’s page on understanding notices and letters (IRS.gov).

Common mistakes and practical corrections

Below are the typical errors I see and the exact corrective actions that work in practice.

  1. Ignoring the notice
  • Why it happens: Taxpayers assume it’s a scam, a duplicate, or an administrative error.
  • Risk: Missed deadlines, penalties, interest, and sometimes enforced collection like liens or levies.
  • How to fix it: Open and read every IRS notice immediately. Confirm authenticity (see the scams section below). If legitimate, follow its instructions or contact the IRS number on the notice. If you need help responding, contact a CPA, enrolled agent, or the Taxpayer Advocate Service.
  1. Missing or misreading deadlines
  • Why it happens: Notices contain different timeframes (30 days, 60 days, 90 days) and small-print instructions.
  • Risk: Losing appeal rights (for example, a Notice of Deficiency generally gives 90 days to petition Tax Court) or additional tax assessed automatically.
  • How to fix it: Note the deadline and type of response required. If you need more time, request an extension in writing or call the phone number on the notice—but do so before the deadline. Keep a record of the request.
  1. Responding with incomplete documentation
  • Why it happens: Taxpayers assume a short letter or partial records suffice.
  • Risk: The IRS can close the case in their favor if supporting evidence is inadequate.
  • How to fix it: Match your evidence to the IRS’s stated issue. For an income mismatch (CP2000), provide copies of the return, W‑2s, 1099s, and bank records as required. See our practical checklist for responding to a CP2000 notice for common documentation needs: Responding to a CP2000 Notice: Steps to Take.
  1. Admitting liability without checking facts
  • Why it happens: People want to end correspondence quickly and sign forms or agree to changes.
  • Risk: You may agree to incorrect additional tax or waive appeal rights.
  • How to fix it: Review the proposed change line‑by‑line. If you disagree, state why and provide documentation or a corrected return. If unsure, consult a tax professional before signing or paying.
  1. Paying a fraudulent or scam demand
  • Why it happens: Scammers mimic IRS formatting or call demanding payment.
  • Risk: Financial loss and identity theft.
  • How to fix it: Learn how to spot scams. The IRS will generally contact by mail first—not by threatening phone calls demanding immediate payment. Read our guide on Detecting IRS Scams: Distinguishing Official Notices from Fraud for common red flags.
  1. Using the wrong method to respond
  • Why it happens: Notices sometimes instruct to mail documents to a special processing center, call a specific number, or use IRS online tools.
  • Risk: Response delivered to the wrong department, delay, or no action taken.
  • How to fix it: Follow the exact return address, fax, or online submission method listed on the notice. If you’re re‑filing or amending, use the correct form (for example, Form 1040X to amend individual returns) and include a cover letter referencing the notice code.

Step-by-step: How to respond to a typical notice

  1. Read the notice fully and note the notice number, tax year, and deadline.
  2. Confirm authenticity using the IRS website or by calling the phone number printed on the notice. The IRS maintains a page explaining notices and letters (IRS Notices & Letters).
  3. Determine whether you agree with the IRS. If you accept the adjustment, follow the payment instructions or set up a payment plan.
  4. If you disagree, gather supporting documents and prepare a clear, numbered response referencing each item on the notice.
  5. Send your response by certified mail with return receipt or follow the IRS’s directed submission method. Keep copies of everything.
  6. If unable to pay, consider these options: short‑term extension, installment agreement, Offer in Compromise (for qualifying cases), or temporarily requesting a hardship hold by the Taxpayer Advocate Service.

Timeline and deadlines to remember (typical examples)

  • CP2000 (income mismatch): often gives 30 days to respond; follow the reply instructions on the notice (IRS CP2000 information).
  • Notice of Deficiency (90‑day letter): grants 90 days to file a Tax Court petition. Missing this can forfeit court review rights.
  • Collection notices (e.g., Notice of Intent to Levy): may provide shorter windows for a Collection Due Process hearing.
    Always check the specific notice for the exact deadline.

Documentation checklist — what to include when disputing adjustments

  • Copy of the IRS notice
  • A clear cover letter that states whether you agree or disagree and explains the reason
  • Copies (never originals) of W‑2s, 1099s, corrected 1099s, bank statements, receipts, canceled checks, or corrected returns
  • A signed statement from a third party if relevant (e.g., corrected employer wage statement)
  • Proof of prior correspondence (certified mail receipts, fax confirmation)

Handling payments, penalties, and interest

  • If you can pay: pay promptly to stop further interest and penalty accrual. Use direct pay or Electronic Federal Tax Payment System (EFTPS) when available.
  • If you cannot pay: call the number on the notice to discuss installment agreements or apply online. If you have reasonable cause (serious illness, natural disaster, etc.), you may qualify for penalty relief such as First Time Penalty Abatement—document the circumstances.
  • If you disagree with penalties: submit a written protest or request penalty abatement with supporting evidence.

When to get professional help

  • The notice proposes a large tax assessment or affects multiple years.
  • You receive a Notice of Deficiency, a Notice of Intent to Levy, or a Notice of Federal Tax Lien.
  • You’re unsure how to present evidence or need to appeal. In my practice, a short consultation often saves far more than the fee when it prevents a mistaken admission or missed deadline.

For strategy on timing and appeals, see Understanding the IRS Notice Timeline: From Inquiry to Levy.

Avoiding scams and verifying notices

  • Official IRS communications arrive by mail. The IRS will not initiate most enforcement actions by phone, email, or text.
  • Verify suspicious contacts by using the contact information on IRS.gov, not the numbers provided in the suspicious message. See Detecting IRS Scams: Distinguishing Official Notices from Fraud for guidance.

Real-world examples (brief)

  • Case 1: A self‑employed taxpayer ignored a CP2000 that had a 30‑day reply window. After missing the deadline, penalties and interest accrued. The case was resolved later, but the taxpayer paid an extra $1,800 in interest and penalties that could have been reduced with a timely response.
  • Case 2: A client misread a Notice of Deficiency and mailed a payment instead of filing a Tax Court petition—losing the opportunity for court review. We worked with the IRS to reopen communications, but the process took months and required documentation to prove reasonable cause.

Frequently asked questions

  • How long do I have to respond to an IRS notice? Always check the notice. Many notices use 30 days, but some (like a Notice of Deficiency) use 90 days. Deadlines are strict—act early.
  • Can I appeal an IRS notice? Yes. Many notices include appeal rights or instructions to request a conference. Appeals must be filed per the specific process in the notice.
  • Can penalties be removed? Sometimes. The IRS may abate penalties for reasonable cause or under first‑time relief rules. Document your facts and request abatement in writing.

Useful IRS and government resources

Related FinHelp guides

Final professional tips

  • Act promptly — the biggest practical win is responding within the notice deadline.
  • Keep everything organized chronologically and back up digital copies.
  • Don’t sign anything you don’t understand; consult a licensed tax professional when in doubt.

Professional disclaimer: This article is educational and does not constitute tax advice. For guidance tailored to your situation, consult a licensed tax professional or contact the IRS directly.

Sources: IRS.gov notices and letters pages; professional experience advising taxpayers for over 15 years.