Background
The IRS sends notices for many reasons: math errors, unreported income, audit requests, proposed adjustments, or collection actions. Some notices simply ask you to verify information; others (for example CP2000 or a Notice of Deficiency) can lead to additional tax, penalties, or collection activity if not handled correctly (IRS). In my 15 years advising clients, early professional help repeatedly prevents escalation and preserves appeal rights.
How it works
Most IRS notices explain the issue, the action required, and a deadline. If the notice is straightforward—such as a corrected address or a minor math correction—you can often respond directly. But seek help if the notice:
- Proposes a significant adjustment to income or credits (e.g., CP2000).
- Is a Notice of Deficiency (start of formal deficiency process).
- Starts collection efforts (levy, lien, or Notice of Intent to Levy).
- Triggers an audit (correspondence, office, or field audit).
- Mentions penalties, criminal exposure, or large balances you can’t immediately pay.
Professional help can include a CPA, enrolled agent (EA), or tax attorney. Each has strengths: CPAs for accounting and tax return issues, EAs for representation before the IRS, and tax attorneys when legal or criminal matters or complex litigation arise.
Real-world examples
- Proposed adjustment: A freelancer received a CP2000 claiming underreported 1099 income. A tax advisor reviewed bank records and corrected reporting errors; the proposed assessment was withdrawn.
- Audit notice: A growing small business received a correspondence audit; a prepared CPA organized an audit binder and negotiated limited scope, avoiding wider exposure.
Who is affected
People most likely to need professional help include:
- Freelancers, contractors, and business owners with mixed personal/business finances.
- Taxpayers with large balances or repeated notices.
- Anyone served with a Notice of Deficiency, levy, lien, or audit notice.
- Taxpayers unsure how to respond by the deadline.
Practical tips (what I tell clients)
- Read the notice carefully and note deadlines. Don’t ignore it. (IRS: “Understanding your IRS notice or letter”)
- Gather the documents referenced before calling anyone: tax returns, W-2s, 1099s, bank statements, and prior correspondence.
- Contact a professional early—within the response window—so they can preserve appeal rights and negotiate or file timely responses.
- Verify credentials: ask for PTIN, EA designation, CPA license, or bar number for attorneys. Confirm they have IRS representation experience.
- If you can’t pay, a professional can evaluate options: installment agreement, offer in compromise, temporary delay, or penalty abatement.
Common mistakes
- Ignoring notices until collection begins (this increases penalties and interest).
- Choosing the wrong advisor—e.g., hiring a tax preparer without representation experience for an audit.
- Over-sharing sensitive information before verifying credentials.
Quick FAQ
Q: Can I respond to the IRS myself?
A: Yes for simple notices, but complex adjustments, audits, or collection notices often benefit from professional representation.
Q: How much will help cost?
A: Fees vary by complexity. Many professionals offer a short initial consult; audits and negotiations cost more. Weigh the cost against potential tax, penalties, and interest.
Q: What documents should I bring to a consultation?
A: The notice, the tax return involved, wage and income documents (W-2/1099), bank statements, and any correspondence with the IRS.
When to escalate to a tax attorney
If the notice suggests criminal charges, fraud, or if you need to sue the IRS in Tax Court, contact a tax attorney. For representation in audits, CPAs and EAs can represent you before the IRS; attorneys add privilege and litigation experience.
Related resources on FinHelp
- Preparing for an IRS Correspondence Audit: What Documentation Helps (internal guide) — https://finhelp.io/glossary/preparing-for-an-irs-correspondence-audit-what-documentation-helps/
- Audit Defense Options: When to Settle, Appeal, or Litigate — https://finhelp.io/glossary/audit-defense-options-when-to-settle-appeal-or-litigate/
- Taxpayer Rights During an Audit: What the IRS Must Provide — https://finhelp.io/glossary/taxpayer-rights-during-an-audit-what-the-irs-must-provide/
Authoritative sources
- IRS — Understanding your IRS notice or letter: https://www.irs.gov/individuals/understanding-your-irs-notice-or-letter
- IRS — CP2000 notice information: https://www.irs.gov/individuals/cp2000-notice
- Consumer Financial Protection Bureau — dealing with tax debt and collections: https://www.consumerfinance.gov
Professional disclaimer
This article is educational and does not constitute legal, tax, or financial advice. For guidance tailored to your situation, consult a qualified tax professional (CPA, EA, or tax attorney) licensed in your state.
