You Got a Letter From the IRS: Now What?

An envelope from the IRS has a way of stopping your whole day. Before it does, take a breath. Most IRS letters are routine, often resolved with a single response, and many are simply the computer asking a question rather than an accusation. Let’s walk through it calmly, because panic is the only part of this that never helps.

First: is this letter even real?

Start here, because scams are common. The genuine IRS almost always contacts you first by physical mail, not by a surprise phone call, text, or email demanding immediate payment. A real notice will have a notice or letter number printed in the corner, usually something like “CP” or “LTR” followed by digits, and it will reference a specific tax year. It will never demand payment by gift card, wire, or cryptocurrency, and it won’t threaten to send police over a phone line. If a “letter” arrives by email or someone calls insisting you pay this instant or else, treat it as a scam until proven otherwise. When in doubt, you can verify any notice independently before doing anything it asks.

What do the common notices actually mean?

Notices come in types, and the code in the corner tells you which. A few you’re most likely to see, described in general terms: some notices simply say the IRS adjusted your return and you now have a balance or a refund, often a math or data mismatch and nothing sinister. One common type (you may see it referred to as a CP2000) is an “underreporter” notice, which means the income reported to the IRS by an employer, bank, or brokerage didn’t match what showed up on your return, and it proposes a change. Importantly, that kind of notice is a proposal, not a final bill; you’re allowed to disagree. Other letters request a specific missing form, ask you to verify your identity before a refund is released, or remind you of a balance due. The type determines the deadline and the response, which is why the very first thing to find is that code.

What should I do in the first ten minutes?

Four things, in order. Open it first, because the worst outcome comes from the letter you leave unopened on the counter, and these have deadlines. Read it all the way through, twice; the IRS actually states what it wants and by when. Find the deadline and write it down somewhere you’ll see it. Most notices give you a window, commonly around 30 days, to respond or to disagree. And compare the notice to your records, then pull the return in question and the documents behind it, because very often you’ll spot immediately whether the IRS is right, partly right, or working from something you can explain. Keep the envelope and the letter together in one place; you may need the exact notice number later.

What if the IRS is wrong, or I disagree?

You have the right to disagree, and disagreeing is a normal, built-in part of the process, not a fight you’re picking. Most notices include instructions and a form or checkbox for exactly this, along with an address or fax number for your response. The key is to reply in writing, by the deadline, with copies (never originals) of the documents that back up your position: the 1099 that was actually corrected, the cost basis the IRS didn’t have, the receipt for the deduction. A clear, calm, well-documented response resolves a great many of these without anything escalating. What you don’t want to do is ignore it: a proposed change you never answer can quietly become a final one.

What if the IRS is right, and I owe?

Then it’s simpler than you fear. If you review the notice and agree, you generally just follow the payment instructions. If you can’t pay the full amount at once, the IRS has legitimate payment-plan options that let you spread it out. The mistake to avoid is silence out of dread. Interest and penalties grow while a balance sits unaddressed, but they stop growing the moment you engage and set up a plan. Owing money is a solvable problem. Avoiding the letter is what turns a solvable problem into a bigger one.

When should I bring in a professional?

Handle the small stuff yourself with confidence. A quick identity verification or sending in one missing form rarely needs help. But it’s worth calling in a pro when the dollar amount is large, when you don’t understand what the notice is claiming, when it involves multiple years, when the deadline is close and you’re not sure how to respond, or any time the words “audit,” “examination,” or “levy” appear. As a CPA I’m authorized to represent you before the IRS and, with your permission, to speak with them on your behalf, which often means you don’t have to make that phone call yourself at all.

If a letter has landed and you’d rather not decode it alone, book a free 15-minute intro call. Have the notice in front of you, read me the number in the corner, and I’ll tell you plainly what it means, whether it’s urgent, and what the right next step is. There are no scare tactics, just a clear path forward.