IRS Statutory Notices: What Each Letter Requires You to Do

Overview

IRS statutory notices are formal, legally significant letters from the Internal Revenue Service that require you to take a specific action or else face further enforcement (penalties, interest, liens, levies, or loss of appeal rights). These notices range from informational bills to “statutory” notices that trigger legal rights and deadlines—such as the right to go to Tax Court or to request a Collection Due Process hearing. Treat every statutory notice seriously and read it closely for the deadline and the exact next step the IRS demands (payment, documentation, or a written protest) (IRS: Understanding Your IRS Notice).

Common statutory notices and what each typically requires

Below are the statutory notices you will most often see and the practical actions they require.

• CP2000 — Proposed changes to your tax return due to mismatched income or withholding. Action required: review the proposed adjustments, sign and return the response form with corrections or documentation, or pay the proposed tax. You can accept, partially agree, or dispute (IRS CP2000 page).

• CP3219A / Notice of Deficiency — A statutory notice that starts the 90-day window to file a petition in U.S. Tax Court. Action required: file a petition in Tax Court within 90 days (or 150 days if the notice was addressed outside the U.S.) to contest the deficiency; if you do nothing, the IRS can assess the tax and begin collections (this notice is often called a ‘‘90-day letter’’).

• CP504 / Final Notice of Intent to Levy — Final notice before levy. Action required: pay the full amount, enter a collection alternative (installment agreement, Offer in Compromise, or request a Collection Due Process hearing), or contact the IRS immediately to avoid levy (IRS Collection Due Process information).

• Notice of Federal Tax Lien (NFTL) — Public notice the IRS files to protect its claim on your property. Action required: immediately evaluate payment or appeal options; a timely Collection Due Process hearing can be requested within 30 days of the NFTL notice to contest filing or propose alternatives.

• CP14 / Balance Due Notice — A bill demanding payment of assessed tax plus penalties and interest. Action required: pay, request a payment plan, or dispute the assessment if you have grounds.

• CP90/CP91 — Notice of Intent to Levy (bank account levy or wage levy) with an immediate time pressure. Action required: respond before the levy date; request Collection Due Process or contact the IRS to arrange payment.

(For IRS reference on notices and bills, see: https://www.irs.gov/individuals/understanding-your-irs-notice)

Step-by-step: How to respond to a statutory notice (practical workflow)

1. Pause and read the notice fully. Identify the notice code (e.g., CP2000, CP3219A) in the upper-right corner and the deadline.
2. Don’t ignore deadlines. For statutory notices especially, missing a timeline can forfeit your right to appeal (e.g., 90-day Tax Court window for a Notice of Deficiency).
3. Verify the facts. Cross-check your tax return, W-2s, 1099s, and other records. If the notice lists income your records do not show, gather supporting documents.
4. Decide whether to accept, partially agree, or dispute. If you agree, follow the payment instructions; if you disagree, prepare a clear written response with copies of supporting documents.
5. If the notice is a 90-day letter (CP3219A), contact a tax attorney or CPA immediately if you plan to petition Tax Court—there’s no extension of the 90-day limit for filing.
6. If the notice threatens levy or lien, act fast. You can often stop a levy by paying, entering an installment agreement, or requesting a Collection Due Process hearing (IRS Collection Due Process page).

Evidence and documentation

Always send copies, not originals. Useful documents include:

• Signed returns or amended returns (Form 1040-X) if correcting a prior filing.
• Wage statements (W-2s), 1099s, bank statements, and employer payroll records.
• Correspondence with third parties that clarify income or deductions.
• Proof of timely payments or prior settlements.

Use certified mail or another trackable method for physical responses and keep a log of phone calls (date, time, representative, and summary). I recommend saving digital copies and a paper file; in my practice this reduces repeat notices by clarifying the taxpayer’s position.

Appeals, hearings, and legal rights

• Tax Court petition (Notice of Deficiency): If you receive a CP3219A (90-day letter), filing a petition with the U.S. Tax Court preserves your right to challenge the proposed tax without first paying the amount. Consult a tax attorney or an experienced enrolled agent immediately.
• Collection Due Process (CDP): For levies and liens, you have 30 days (for an NFTL) or generally 30 days to request a CDP hearing (different notices may have slightly different limits). A CDP hearing can stop collection action while the appeal is pending (IRS: How do I request a CDP hearing?).
• Offers in Compromise and Installment Agreements: These collection alternatives require documentation (financial statement, proof of income and expenses). If eligible, they can prevent enforced collection and resolve debts over time.

Payment and collection alternatives

• Pay in full online or by check following the notice instructions if you agree with the assessment. Online payments are processed faster and can minimize additional interest.
• Request a short-term extension or an installment agreement if you cannot pay immediately.
• Consider an Offer in Compromise only if your financial situation makes full collection unlikely; the IRS has strict eligibility rules and a detailed application process (Form 656-B and financial disclosures).

Scams and authentication

Not every letter that looks like it’s from the IRS is real. Verify legitimacy: the IRS generally initiates contact by mail and will not demand immediate payment by gift card or threaten arrest over email. If you suspect a scam, compare the notice to IRS examples and call the IRS using a published phone number—do not use phone numbers on suspicious messages. See our guide on recognizing scam notices vs. genuine correspondence for more steps.

Useful internal resources:

• Decoding IRS CP2000 notices: https://finhelp.io/glossary/decoding-irs-cp2000-notices-what-they-mean-and-how-to-respond/
• Timeline for responding to IRS notices: https://finhelp.io/glossary/timeline-for-responding-to-irs-notices-deadlines-and-extensions/
• Consequences of ignoring IRS notices: https://finhelp.io/glossary/consequences-of-ignoring-irs-notices-from-penalties-to-levies/

Common mistakes to avoid

• Assuming the IRS is always correct. The IRS processes millions of information returns and makes mistakes. Review their data against your records.
• Missing deadlines. Statutory notices often carry strict time limits for appeals.
• Sending original documents. Send copies and retain originals.
• Paying immediately without verifying. If you disagree, you may preserve your rights by timely protesting rather than paying and losing certain appeal options.

FAQs

Q: Can I appeal every IRS notice? A: No. Only certain notices (like the Notice of Deficiency and collection notices tied to levies and liens) create statutory appeal windows. The notice itself explains whether an appeal or hearing is available.

Q: What if I can’t afford to hire a tax pro? A: Low-income taxpayers may find free help from IRS Volunteer Income Tax Assistance (VITA) or low-cost representation from enrolled agents. However, for notices with short deadlines (e.g., CP3219A), I strongly recommend professional help.

Q: How long does the IRS have to collect a tax? A: Generally, the IRS has 10 years from assessment to collect (the Collection Statute Expiration Date), though certain actions can extend or pause that period.

Professional tips from my practice

• Read the notice twice: once for the headline (code and deadline), once for the details (line items and instructions).
• Start with documentation: if you can assemble supporting records within a week, you often avoid escalation.
• Create a response packet: a cover letter, copies of supporting documents, and a clear statement of your position. This helps IRS reviewers act quickly and reduces back-and-forth.
• If threatened with levy, request a Collection Due Process hearing even if you plan to seek a collection alternative—the hearing suspends collections while your appeal is pending.

Disclaimer and authoritative sources

This article is educational and does not replace personalized tax advice. Tax situations vary—consult a qualified tax professional, attorney, or enrolled agent for guidance tailored to your facts. Authoritative references used in this article include the IRS “Understanding Your IRS Notice” page and IRS guidance on notices, levies, and appeals (IRS.gov). Key source links: https://www.irs.gov/individuals/understanding-your-irs-notice; https://www.irs.gov/businesses/small-businesses-self-employed/irs-notices; and IRS pages about CP2000 and Collection Due Process.

If you received a statutory notice and are unsure how to proceed, gather your documents and contact a qualified professional right away. Acting promptly and with documentation is the most reliable way to protect your rights and minimize costs.