Introduction

An IRS notice can trigger anxiety, but the process that follows is structured and governed by rules. This article explains each stage in the lifecycle of an IRS case, practical actions to take at every step, common timelines and deadlines, and where to get help. I write from 15 years of experience representing taxpayers as a CPA; those practical details are woven through the guidance below.

Stage 1 — Receipt and Triage of an IRS Notice

  • What you’ll get: Notices and letters arrive by mail (the IRS rarely initiates tax enforcement by email). Read the heading and the notice code—those two things tell you whether the IRS needs information, proposes changes, or is starting collection.
  • Immediate actions:
  • Read the notice carefully and note the response deadline. Many notices request a reply within 30 days, but deadlines vary—check your specific letter. (See IRS guidance: “Understanding Your IRS Notice or Letter”.)[https://www.irs.gov/individuals/understanding-your-irs-notice-or-letter]
  • Don’t ignore it. Ignoring a notice can escalate penalties or lead to enforced collection.
  • Save a copy and any attachments, and flag the taxpayer ID, tax year, and contact information.

Stage 2 — Early Response and Documentation

  • Open, honest response matters. If the IRS is asking for documents or clarification, gather and send only what is requested. Overloading the IRS with unrelated records can slow the process.
  • Organize records chronologically and label them. If you’ll use a representative, complete Form 2848 (Power of Attorney) to authorize them to speak on your behalf. (Form 2848 details: IRS Form 2848.)[https://www.irs.gov/forms-pubs/about-form-2848]

Stage 3 — Types of Examination

The IRS conducts three common types of audits, and the pathway depends on which applies:

Expectations during examination:

  • The IRS will specify the issues and the records requested.
  • Be organized, responsive, and factual. Avoid volunteering extra information that isn’t requested.
  • In my practice, clear labeling of documents and a concise cover letter often shortens agent requests and reduces back-and-forth.

Stage 4 — Proposed Adjustment and Negotiation

If the IRS concludes an adjustment is warranted, they’ll send a proposed notice outlining changes and any balance due, penalties, and interest. At this point you can:

  • Accept the changes and pay (or arrange payment).
  • Negotiate: Provide additional documentation or a reasonable explanation. For certain disputes, submitting a well-documented package (organized evidence, legal authority, and a succinct cover letter) will persuade the examiner to make concessions.
  • Request an appeals conference with the IRS Office of Appeals if you disagree. Preparing for appeals is different than preparing for an audit — focus on legal arguments and material facts. See our guide on preparing for the appeals conference.[https://finhelp.io/glossary/tax-audit-appeals-how-to-prepare-for-the-appeals-conference/]

Stage 5 — Collection, Payment Options, and Enforcement

If you accept the assessment or lose an appeal, the IRS will expect payment. Options include:

  • Full payment.
  • Installment agreement (monthly payments).
  • Offer in Compromise (settle for less than full balance) — qualifying has strict criteria.
  • Collection Due Process (CDP) hearing when the IRS files a Notice of Federal Tax Lien or proposes a levy.

The IRS provides online tools and forms to request payment plans or offers. Use the IRS site for official procedures: Offer in Compromise and installment agreement pages on IRS.gov.[https://www.irs.gov/payments]

Stage 6 — Appeals and Litigation

  • Appeals: If you disagree with the IRS determination, ask for an independent review by the IRS Office of Appeals. This is an administrative review aimed at reaching a fair settlement without going to court. Appeals have strict filing windows—note them carefully.
  • U.S. Tax Court and federal court: If administrative appeals are exhausted, you may litigate in Tax Court (often without paying the disputed tax first) or another federal court, though procedural rules and timing differ.

Important Deadlines and Statutes

  • Statute of limitations to assess additional tax: Generally three years from the date you filed the return. It extends to six years if you omitted more than 25% of gross income. There is no statute of limitations for fraud or returns not filed. (See IRS Assessment Statute of Limitations.)[https://www.irs.gov/businesses/small-businesses-self-employed/assessment-statute-of-limitations]
  • Response deadlines on notices: Vary by notice type—many allow 30 days to respond or request appeal. Always use the exact date on the letter.

Practical Timeline — What to Expect

  • Correspondence audit: 2–6 months typical resolution if you respond promptly.
  • Office audit: Several months depending on scheduling and document exchange.
  • Field audit: Can take 6–18 months for complex business cases.
  • Appeals: 6–12 months on average, sometimes longer for complex technical issues.

Common Mistakes I See in Practice

  • Ignoring notices. This often turns a solvable issue into a collection action.
  • Providing poor evidence. Vague receipts or undocumented reimbursements are frequent problems. I advise clients to supply corroborating records (bank statements, contracts, invoices) organized to match the issues raised.
  • Admitting fault or volunteering unrequested information. Stick to the requested facts.

What You Can Do Right Now

Taxpayer Rights and Resources

  • Know the Taxpayer Bill of Rights: You have the right to be informed, the right to quality service, and the right to challenge the IRS’s position and be heard. (IRS: Taxpayer Bill of Rights.)[https://www.irs.gov/taxpayer-bill-of-rights]
  • Independent guidance: Consumer Financial Protection Bureau and state bar or CPA associations can help you find reputable representation. (CFPB resources: https://www.consumerfinance.gov/)

When to Hire a Professional

  • Complex business issues, potential fraud allegations, or multi-year adjustments: hire an experienced CPA or tax attorney.
  • If you are uncomfortable communicating with the IRS or the case involves collection enforcement (levies, liens), get professional help.

Checklist for Your First 72 Hours After a Notice

  1. Read the notice and note the deadline.
  2. Make a clean digital copy and archive the original paper notice.
  3. Identify the tax year and the items under question.
  4. Gather requested documents and a short cover letter explaining your position.
  5. Consider hiring representation if liability is substantial or complex.

FAQ (Short)

  • How long does an IRS case take? Timelines vary from a few months for simple correspondence audits to years for complex litigation. Your responsiveness and documentation speed up the process.
  • Can I appeal? Yes. You typically can request an administrative appeal or pursue litigation after appeals are exhausted.

Authoritative Sources

Internal resources (read next)

Professional Disclaimer

This article is educational and reflects common procedures and best practices as of 2025. It is not legal or tax advice for any individual situation. For tailored guidance, consult a qualified tax professional or attorney.

Final note

A well-managed response, clear documentation, and timely use of appeals or payment options usually lead to an efficient resolution. In my practice, proactive organization and early professional involvement turn many stressful IRS contacts into manageable outcomes.