What to Do If You Receive an IRS Notice: A Complete Guide by Notice Type
Received an IRS Notice in 2025? What Your IRS Letter Means and What to Do Next
An IRS notice is stressful, but it is also an opportunity to fix a tax issue before it snowballs into liens, levies, or wage garnishment. Understanding what your letter means and how to respond quickly is the key to protecting your money and your peace of mind.
How to Know Your IRS Letter Is Real
Legitimate IRS notices share several consistent features that scammers often miss. Before doing anything, scan your letter for:
Official IRS and U.S. Department of the Treasury letterhead and logo at the top of the page.
Your correct legal name, mailing address, and a partially masked SSN/TIN or tax ID number (usually only the last 4 digits).
A notice or letter number (such as CP14, CP2000, CP503, LTRxxxx) in the top-right or bottom-right corner.
A clear explanation of why the IRS is contacting you, which tax year it involves, and what the IRS says you owe or must do.
A specific response deadline (often 21–30 days) and step-by-step instructions for how to respond or pay.
Red flags that suggest a fake IRS notice include:
Poor grammar, spelling errors, weird formatting, or mixed fonts in the body of the letter.
Demands for immediate payment via gift cards, wire transfers, prepaid debit cards, Cash App, or Zelle (the IRS does not collect this way).
Threats of immediate arrest, deportation, or seizure if you don’t pay “today.”
Phone numbers or email addresses that do not match those listed on IRS.gov when you cross-check them.
If you are unsure, you can search the exact notice number (for example, “CP2000” or “CP503”) on IRS.gov and compare it to the sample notice and instructions there.
Top 10 Common IRS Notices Explained
Most IRS letters fall into patterns: balance-due notices, underreporting notices, reminder/collection letters, and audit-related letters. Below are 10 of the most common IRS notices and what they typically mean.
1. CP14 – Balance Due Notice
What it is: CP14 is usually thefirstbill the IRS sends when their records show you owe at least a small balance on your tax return.
What it means: The notice shows how much tax, interest, and penalties you owe and asks for payment by a specific due date (often about 21 days from the notice date).
If you ignore a CP14, the IRS can add more penalties and interest and begin the collection notice chain (CP501, CP503, CP504) that may eventually lead to liens or levies.
2. CP2000 – Proposed Changes (Underreported Income)
What it is: CP2000 is sent when the IRS’s computer systems find a mismatch between the income or investments reported on your tax return and what employers, banks, or brokers reported to the IRS.
What it means: The IRS proposes additional tax, interest, and sometimes penalties based on the mismatch and asks you to either agree or disagree by the deadline (usually about 30 days).
You must formally respond to a CP2000—even if you agree—or the IRS can finalize the changes and assess the extra tax automatically.
3. CP501 – First Reminder of Balance Due
What it is: CP501 is a reminder notice telling you that you still have an unpaid tax balance from a previously filed return (often after a CP14).
What it means: The IRS is warning that your balance remains unpaid and interest and penalties are continuing to grow until you pay or make arrangements.
This notice is a warning shot; responding at this stage keeps things from escalating into more aggressive collection letters.
4. CP503 – Second Reminder / Urgent Balance Due
What it is: CP503 is a more urgent follow-up reminder that your balance is still unpaid, typically after CP501.
What it means: The IRS signals that further collection actions may follow if you do not respond by the due date, typically about 21 days from the notice date.
Failing to act after a CP503 can push your case toward CP504, which is a final notice before levy.
5. CP504 – Final Notice Before Levy
What it is: CP504 is a final reminder that the IRS intends to levy (take) certain property, often starting with your state tax refund, if you do not resolve your balance.
What it means: The IRS is warning that they will move from letters to actual collection action if you continue to ignore the debt.
At the CP504 stage, resolving or setting up a payment plan quickly is critical to avoid tax liens and wage garnishment.
6. CP90 / LT11 – Final Notice of Intent to Levy
What it is: CP90 (or its letter equivalent LT11) is a formal notice of intent to levy your wages, bank accounts, and other property and informs you of your right to a Collection Due Process (CDP) hearing.
What it means: The IRS is preparing to take enforced collection action if you do not respond or request a hearing by the deadline stated in the letter.
Ignoring a CP90 or LT11 can result in garnishments, bank levies, and the filing of a Notice of Federal Tax Lien against you.
7. CP11 – Tax Due After a Math or Processing Change
What it is: CP11 is sent when the IRS corrects a math or calculation error on your return and those changes result in additional tax you owe.
What it means: The IRS has already adjusted your return, and you now have a balance due, along with a due date for paying to avoid more penalties and interest.
If you disagree with the correction on a CP11, you can contact the IRS or request a review, but you need to act before the deadline on the notice.
8. CP12 – Overpayment / Refund Changed
What it is: CP12 notifies you that the IRS adjusted your return and those changes resulted in a different refund amount or that a balance due was reduced.
What it means: The IRS identified an error that changes your refund or reduces what you owe, and the letter explains how and why they adjusted your return.
Even if the result is favorable, you should read CP12 carefully to ensure the IRS’s changes match your records.
9. CP71C – Annual Reminder of Unpaid Balance
What it is: CP71C is an annual reminder that you still owe the IRS from a prior year and that interest and penalties continue to accrue.
What it means: The IRS is keeping your old balance on the radar and giving you another chance to resolve or set up a payment arrangement.
This is a sign that your tax problem is not going away on its own and that a structured resolution plan may be needed.
10. IRS Audit Letters (e.g., Letter 525, 566, 3219)
What they are: Audit letters (often labeled “Letter” instead of “CP”) inform you that your return is being examined and list specific items the IRS is questioning.
What they mean: These letters explain whether the audit is by mail or in person and include a deadline to send documents, call, or meet with an examiner.
If you receive an audit letter, take it seriously and gather documentation for the items listed, such as income, deductions, or credits.
Deadlines, Consequences, and How to Respond
Every IRS notice includes a “respond by” date, and missing it is where small problems turn into bigger ones. In general, balance-due and underreporting notices give about 21–30 days to respond, while some final levy notices and appeals windows are very strict.
Typical timelines and consequences include:
CP14 / CP501 / CP503: Often 21 days to pay or make arrangements before the IRS escalates to CP504 or more aggressive collection actions.
CP2000: Usually about 30 days to agree or disagree and send documentation, or the IRS will finalize the proposed changes.
CP504 / CP90 / LT11: Final notices before levy, with strict deadlines; missing them can lead to wage garnishment, bank levies, and liens.
Audit letters: Deadlines to mail documents, call, or request an appeal; ignoring them can result in the IRS making changes without your input.
Penalties and interest generally continue to grow until the balance is fully paid or formally resolved through a payment plan, settlement, or other relief option.
Step‑by‑Step Guide: What to Do When You Receive an IRS Notice
Use this simple framework any time you receive an IRS notice or IRS audit letter.
Stay calm and read the notice.
Open the letter immediately and read it from top to bottom, noting the notice number, tax year, and the reason for the notice.
Highlight or mark the response deadline and the amount the IRS says you owe or plans to change.
Confirm the notice is legitimate.
Check for the IRS logo, official letterhead, your correct information, and a CP or letter number.
If anything looks suspicious, compare the letter to the version on IRS.gov for that notice number or call the IRS using a phone number from IRS.gov, not from the letter alone.
Identify the notice type and what it means.
Look up the notice number (e.g., CP14, CP2000, CP503) to understand whether it is about a balance due, underreported income, an audit, or final collection action.
Knowing where you are in the notice sequence helps you prioritize how urgently you need to respond.
Compare the IRS information to your records.
Pull your filed tax return, W‑2s, 1099s, bank statements, and other documents for the tax year in question.
For CP2000 or audit letters, line up each item the IRS lists with your own records to see whether they are correct or missing something.
Decide whether you agree or disagree.
If you agree with the notice (for example, CP14 or a correct CP11 math correction), follow the payment instructions or set up a payment plan.
If you disagree, prepare a written explanation, attach supporting documents, and use the response form or instructions in the notice.
Respond in writing before the deadline.
Mail, fax, or submit your response through the IRS’s designated online tools, following the exact instructions in the notice.
Keep copies of everything you send, plus proof of mailing or fax transmission, in case you need to show that you responded on time.
Set up payment or relief if you owe and cannot pay in full.
Many taxpayers qualify for options such as installment agreements, temporary “Currently Not Collectible” status, or other resolution programs depending on their finances.
A tax professional can help evaluate which option best protects your cash flow and assets while bringing you back into compliance.
Watch for follow‑up letters or confirmations.
The IRS may send additional notices to confirm changes, accept your payment plan, or request more information.
Continue to open every letter and keep your address current so you do not miss critical updates.
When to Hire a Tax Professional
Not every notice requires professional help, but certain situations are high‑risk and high‑stress. In these cases, getting expert representation can save you money, time, and serious headaches. Consider hiring a tax professional if:
You received a CP2000 with large proposed changes, multiple years involved, or complex investment or business income issues.
You are in the CP504 or CP90/LT11 stage and facing potential levies, liens, or wage garnishment.
You have unfiled tax returns for several years and are now receiving a stack of balance‑due and collection notices.
You received an IRS audit letter (Letter 525, Letter 566, etc.) and are unsure which documents to provide or how to present your case.
You disagree with the IRS but do not feel confident drafting a clear response, appeal, or proposal on your own.
A qualified tax resolution firm or tax professional can:
Review your IRS transcripts, notices, and returns to identify errors and opportunities for relief.
Communicate with the IRS on your behalf, so you do not have to spend hours on hold or worry about saying the wrong thing.
Negotiate payment plans or other solutions that fit your real financial situation and prevent aggressive collection action.
Received an IRS notice?
Connecting with a tax professional early in the process can often stop penalties from growing, avoid levies and liens, and give you a clear plan to resolve your IRS problem with confidence.
