Last year a woman called my office in tears. She’d been sitting on an IRS notice for four months because she was too afraid to open it.
By the time she called me, the 30-day appeal window had closed, $11,000 in penalties had piled up, and the IRS had already filed a federal tax lien against her house.
The notice? A CP14. It’s the most basic balance-due letter the IRS sends. Had she opened it in week one, we could’ve set up a payment plan and avoided every dollar of those penalties.
That story isn’t unusual. I’ve been down that road with more people than I can count. The IRS sends somewhere around 200 million notices a year.
Most of them are fixable. But the ones that turn into real problems? Almost always the ones that sat in a drawer too long.
Key Takeaways
- The IRS sends about 75 different types of letters. Most aren’t audits.
- Every IRS notice has a response deadline (usually 30 or 60 days). Miss it and you lose your right to dispute.
- Balance-due notices (CP14, CP501, CP503, CP504) escalate in severity. Responding to the first one saves you money.
- Levy notices (CP90, LT11) give you 30 days before the IRS can seize wages, bank accounts, and property.
- If the letter seems suspicious, it might be a scam. Read our full scam identification guide here.
What Should You Do the Moment You Get an IRS Notice?
Open it. Yeah, I know. “Open it” isn’t exactly earth-shattering advice. But I wouldn’t say it if people actually did it.
When someone calls my office about an IRS letter, the first thing I ask is whether they’ve read the whole thing. Half the time, they haven’t.
So grab a pen. Read every page. Then write down three things.
First, the notice number. It’s printed in the upper right corner and will say something like CP14, CP2000, or Letter 3219.
Second, the response deadline. It’s usually 30 or 60 days from the date printed on the notice. If you only remember one thing from this article, make it that deadline.
Everything else can be fixed later. A missed deadline can’t.
Third, the dollar amount, if there is one. Write it down but don’t pay it yet.
I can’t tell you how many people have paid an IRS balance in full, same day, just because the anxiety was eating them alive. Then we pull their file and realize they had grounds to dispute the entire amount.
That money? Gone. The IRS doesn’t hand it back easily once it’s in their account.
Write those three things down first. Then decide what to do. If you need a starting point, here are 10 things to do when you owe the IRS.
What Are the Most Common Types of IRS Letters?
The IRS has about 75 different notices and letters in rotation. But in my experience, most taxpayers will only run into a handful of them.
Here are the eight categories that come through my office most often.
1. Balance Due Notices (CP14, CP501, CP503, CP504)
These are the “you owe us money” letters. They show up in a specific order, and each one is more serious than the last.
The CP14 balance due notice is your first letter. It tells you the tax year, how much you owe, and your payment deadline.
If the amount is right, pay it or call the IRS to set up a payment plan. If the amount is wrong, respond in writing with your explanation and supporting documents.
One variation to be aware of. Since 2021, the IRS sometimes sends a CP141A instead of the standard CP14. It’s the same balance-due notice, but it comes with a built-in installment payment agreement offer.
If you agree with the amount and want to set up a payment plan, you can accept it right on the form. If you disagree with the amount, don’t sign it and don’t make any payments until you’ve reviewed the numbers.
Then comes the CP501 unpaid taxes reminder. That’s your first reminder.
The CP503 second reminder notice follows after that.
And the CP504 final balance due notice? That’s the IRS telling you they’re about to start taking your state tax refund and, potentially, other assets.
Here’s the thing most people miss. Every notice in this sequence adds penalties and interest to the original balance. A $3,000 bill on the CP14 can become a $4,500 problem by the time you’re staring at a CP504.
If you owe and can’t pay the full amount at once, you have several ways to pay the IRS that don’t involve draining your bank account in one shot.
Other Balance Due Notices (CP22, CP71, CP141A, CP161, CP15)
A few other balance-due notices worth knowing about. A CP22 balance due from return changes notice means the IRS changed something on your return and now you owe more than you originally paid. Maybe they disallowed a deduction or corrected a credit.
Review the changes line by line before you pay anything.
A CP71 annual balance reminder is the IRS’s yearly reminder that you still have an unpaid balance on your account. It’s not a new bill. It’s them saying “we haven’t forgotten about this, and neither should you.”
If you run a business, watch for the CP161 business tax underpayment notice. That’s the IRS telling you your business underpaid its taxes. Payroll tax shortfalls are the most common trigger I see for these, and the IRS takes payroll tax issues more seriously than almost anything else.
A CP15 is in the same category but it hits harder. It’s a civil penalty notice, usually tied to the Trust Fund Recovery Penalty. That means the IRS is holding you personally responsible for unpaid employment or excise taxes, even if those were a business obligation.
If you want to dispute it, you actually have to pay the penalty first and then file a claim for refund. That’s backwards from most IRS notices, and it catches a lot of business owners off guard.
2. Income Mismatch Notices (CP2000 and CP2501)
These show up when the income on your tax return doesn’t match what employers, banks, or brokerages reported to the IRS on their end.
A CP2000 underreporter notice means the IRS already did the math and is proposing specific changes to your return. A CP2501 income discrepancy inquiry is more of a “we noticed something, explain this” letter.
Neither one is an audit. They come from the IRS’s Automated Underreporter Program, which compares your filed return against every W-2, 1099, and K-1 that third parties submitted with your Social Security number on it.
I had a case last year where a brokerage issued a corrected 1099 but the original one never got removed from the IRS system. So the IRS thought my client earned double what she actually did.
We sent the corrected 1099 with our response, and the whole thing went away in about six weeks. But if she’d ignored it? She would’ve owed $14,000 she didn’t actually owe.
So read these carefully. The IRS isn’t always right.
3. Refund Adjustment Notices (CP12, CP24, CP27)
Not every IRS letter is bad news. Some of these actually work in your favor.
A CP12 refund adjustment notice means the IRS found a math error on your return and adjusted your refund. Sometimes the adjustment is up. Sometimes it’s down.
The IRS sends you a breakdown of what they changed and gives you 60 days to disagree.
A CP24 Child Tax Credit adjustment notice is specifically about changes to your Child Tax Credit amount. A CP27 unclaimed refund notification means you have refund money sitting there waiting for you.
Then there’s the CP49 refund offset notice. This one stings.
It means the IRS took your current refund and applied it to a tax debt you owe from a previous year.
They don’t ask permission first. By the time you get the notice, the money is already gone. If you think the underlying debt is wrong, you’ll need to dispute it separately.
If you agree with any of these changes? You don’t need to do anything. If you disagree, respond in writing within 60 days with your supporting documents.
4. Identity Verification Notices (CP03, 5071C, 5747C)
The IRS wants to confirm you are who you say you are before they process your return. These have gotten a lot more common since identity theft became, well, an industry.
The 5071C and 5747C letters ask you to verify your identity online at IRS.gov/verify or by calling the number on the letter. A CP03 identity verification confirmation is the follow-up that confirms the IRS accepted your verification.
Your refund is frozen until you complete this step. So don’t put it off. The verification itself takes 10 to 15 minutes if you have your prior-year tax return and a form of ID handy.
5. Return Review Notices (CP05)
A CP05 return review notice means the IRS hit the pause button on your return. They’re reviewing your reported income, withholding, or tax credits before releasing your refund.
You probably don’t need to do anything with this one. The IRS is doing its thing in the background. That said, your refund is frozen while they review, and the whole process runs 60 to 120 days depending on what they’re examining.
If the IRS asks you to send additional documents during that window, get them in before the printed deadline. Sitting on it just pushes your refund further out.
The good news is that a CP05 notice isn’t an audit. It’s just a simple review.
Related Return Review Notices (CP75, CP88)
Two related notices fall into this category. A CP75 Earned Income Credit examination notice means the IRS is specifically examining your EIC claim.
They’ll want documentation proving your income, filing status, and qualifying dependents. Respond with everything they ask for, because if you don’t, they’ll deny the credit entirely.
A CP88 unfiled return refund hold notice means you have an unfiled return from a prior year, and the IRS is holding your current refund until you file it. This one has a simple fix. File the missing return and the hold comes off.
6. Levy and Collection Notices (CP90, CP91, CP504B, LT11)
Now we’re in serious tax issue territory.
A CP90 means the IRS intends to levy your property. We’re talking bank accounts, wages, retirement funds, real estate. All of it.
From the date on that notice, you’ve got exactly 30 days to file Form 12153. That’s your Request for Collection Due Process Hearing.
Miss it and the IRS doesn’t need to warn you again. They can pull money straight from your bank account the next business day. I’ve had clients lose their entire checking account balance overnight because they sat on a CP90 for five weeks.
If you do file the appeal on time, your case moves from IRS collections to the appeals office. That buys you 3 to 6 months. One thing people don’t realize, though. Interest keeps running during the entire appeal process. So even if you win, the balance will be higher than it was when you filed.
A CP91 notice is the Social Security version. The IRS is telling you they plan to garnish up to 15% of your monthly benefits for unpaid taxes.
A CP92 notice is a different animal.
It means the IRS already levied your state tax refund to pay your federal tax debt. This one is after the fact, so the money is gone.
You can request a Collection Due Process Hearing, but a word of caution here. Filing that appeal extends the statute of limitations for other collection actions the IRS can take against you. Talk to a tax attorney before you file that form.
Final Notices and Agreement Terminations (CP504B, LT11, CP523)
A CP504B final notice before levy is exactly what it sounds like. An LT11 final notice of intent to levy is the IRS’s last warning and your last shot at requesting a hearing.
If you’ve received an intent to levy letter, the next step is property seizure. There’s no notice after this one.
One more in this category that trips people up. A CP523 installment agreement termination notice means the IRS is about to cancel your existing payment plan because you missed payments or fell out of compliance.
If they terminate it, your full remaining balance becomes due immediately and you’re back to square one with collections. Call them (or call us) the day you get this one.
If any of these show up in your mailbox, the clock is already running. This is where having a tax attorney changes the outcome, because the Collection Due Process Hearing has specific procedural rules.
What you include in your request determines what collection alternatives you can negotiate over the next 3 to 6 months.
One more notice that doesn’t fit neatly into the categories above but absolutely belongs on your radar.
A CP3219A Statutory Notice of Deficiency is sometimes called the “90-day letter.”
It means the IRS is formally proposing additional tax, and you have 90 days to petition the U.S. Tax Court if you disagree. Miss that 90-day window and you lose your right to challenge the amount in court before paying it.
I’ve seen this notice arrive after months of back-and-forth where the taxpayer thought the issue was resolved. Don’t assume anything. Read the dates.
7. Passport Restriction Notices (CP508C)
This one catches people off guard.
A CP508C passport restriction notice means the IRS told the State Department you have seriously delinquent tax debt. The current threshold is $62,000 (it goes up with inflation each year).
Once you cross that line with enforceable debt, the State Department can deny your passport application. They can refuse to renew it. In some cases, they’ll revoke the one you already have.
I’ve had clients find out about this at the airport. That’s a bad way to find out.
You fix this by resolving the tax debt itself. That could mean setting up an installment agreement, getting accepted into an Offer in Compromise, or having your account placed in Currently Not Collectible status.
Once the IRS reverses the certification, the State Department removes the hold. Fair warning, that reversal takes 30 to 45 days to process even after the IRS signs off.
8. Audit Notification Letters (Letter 2205)
This is the one everyone dreads. Letter 2205 is the IRS telling you that your return has been selected for an IRS audit.
It comes as Letter 2205-A for individuals and Letter 2205-B for businesses. The letter identifies which parts of your return are under examination, which documents the IRS wants to see, and the name and phone number of the examiner assigned to your case.
Here’s where people get tripped up. The response deadline on this letter is typically just 7 days, which is much shorter than the 30 or 60 days you get on most other IRS notices.
If you miss it, the IRS can disallow the items they’re questioning and assess penalties, interest, and additional tax without your input. If you get one of these, call a tax attorney the same day.
Is That IRS Letter Real or Is It a Scam?
I’ll make this simple. The IRS sends mail first. Real, physical, U.S. Postal Service mail. Every single time.
If the first time you hear from “the IRS” is a phone call or a text? Not real. Doesn’t matter how convincing it sounds.
Real IRS notices include your taxpayer information, a notice number, and response instructions. They never ask for credit card numbers over the phone.
They never threaten immediate arrest. They never want payment through gift cards (and yes, people still fall for that one).
If you’re unsure, call the IRS directly at 1-800-829-1040 for individuals or 1-800-829-4933 for businesses. Use those numbers, not whatever number appears on the suspicious letter.
For a full breakdown of every scam type and how to report them, read our 2026 IRS Tax Scams Guide.
What Happens If You Just Ignore an IRS Notice?
Nothing good. And I mean that.
Every IRS notice has a response deadline printed on it. When you blow past it, the IRS assumes you agree with everything they said.
That proposed tax increase? It’s now final. That balance due? It’s now locked in with penalties and interest accumulating daily.
Do the math on a $5,000 balance. Penalties run 0.5% per month. Interest compounds daily on top of that.
Within a year you’re staring at $7,000 or $8,000. And if the IRS files a federal tax lien on top of that? Your credit report takes the hit, and it sits there until the balance hits zero.
Getting a federal tax lien released is possible, but it adds another layer of work on top of the original tax problem. Better to avoid it entirely by responding early.
Here’s how the IRS collection machine works. It starts with letters. Then liens. Then levies.
Every step has an off-ramp where you can negotiate, dispute, or set up a payment arrangement. Once those deadlines pass, your options shrink fast.
I had a guy walk in last year owing $23,000. He’d been getting notices for eight months and hadn’t opened a single one.
When we pulled his IRS transcript, the balance had grown to $31,000 with penalties and interest stacked on top. The IRS had already filed a lien. His employer had received a wage garnishment order.
We fixed it, but I’ll be honest, it took twice as long as it should’ve. If he’d called after that first CP14, we could’ve handled the whole thing in a few weeks for a fraction of what it ended up costing him.
When Do You Actually Need a Tax Attorney?
Not every IRS notice requires an attorney. A CP12 adjusting your refund by $200? Handle that yourself.
A CP27 saying you have unclaimed money? Even better, handle that yourself.
But certain situations are a different story.
If the IRS is proposing changes over $10,000, you want someone reviewing those calculations. Got a CP90 or LT11? That 30-day deadline for your Collection Due Process Hearing is already ticking.
And this part matters more than people realize. What you put in that filing determines your entire negotiating position for the next 3 to 6 months. Get it wrong and you’ve limited your own options before the hearing even starts.
Owe more than you can realistically pay? That’s where our attorneys come in. We review your income, your assets, your expenses, and figure out whether you’d qualify for an Offer in Compromise, an IRS installment agreement, or Currently Not Collectible status.
These programs have specific financial thresholds, and applying for the wrong one doesn’t just waste time. It can actually set you back.
Timing made the difference in those cases. Every one of them. The people who called early had more room to negotiate and more programs they still qualified for.
The people who waited paid more. It’s that simple.
If you’re holding an IRS notice right now, call us for a free case evaluation. We’ll go through your notice, tell you exactly what it means, and give you a straight answer on what we’d do if we were in your position.
