What to do when you get a letter from the IRS (and what not to do)

The envelope says Internal Revenue Service. Your stomach drops. That reaction is normal, and most of the time the letter is smaller than it feels. Here is how to read it, what to do first, and the mistakes that turn a small problem into a bigger one.

Is the letter real?

The IRS starts almost every contact by mail. It does not call first, and it does not text. A real notice has a notice or letter number in the top right corner (something like CP2000 or LTR 3219), a tax year, and your name as the IRS has it on file. If someone calls claiming to be the IRS and wants a gift card or your bank login, hang up. If you are unsure whether a letter is real, bring it in and we will look at it with you.

What does the notice number tell you?

That code in the corner is the fastest way to know what you are dealing with. The IRS keeps a page for each notice type at irs.gov, and the letter itself says what it is about, what tax year it covers, and what the IRS wants from you. Read the whole letter once before you do anything. Then read it again with a pen and mark three things: the tax year, the dollar amount (if any), and the date by which the IRS wants a reply.

What does a CP2000 notice mean?

A CP2000 is the letter we see most often at the Reseda office on Tampa Ave. It means the income an employer, bank, broker, or client reported to the IRS does not match what was on your return. Maybe a 1099 arrived after you filed. Maybe a stock sale was reported without its cost. The IRS proposes a change to your tax and asks you to agree or disagree.

The IRS says plainly on its CP2000 page that the notice is not a bill, and that you should reply by the date listed on the notice. It is also not an audit. It is a mismatch. Many CP2000 letters are partly right and partly wrong, which is why you should not just sign and pay. If a stock sale is listed with no cost basis, for example, the IRS may be taxing the whole sale price instead of your gain.

What do CP14 and CP504 mean?

A CP14 is a bill. The IRS says you owe tax that was not paid, and it asks you to pay by the due date on the notice. If you already paid, the letter may have crossed in the mail with your payment, and a copy of the cancelled check or bank record usually settles it.

A CP504 is later in the same chain and more serious. It is a Notice of Intent to Levy. The IRS says it can take your state tax refund, and the letter warns that wages and bank accounts can be next if the balance stays unpaid. A CP504 means earlier letters went unanswered. It still has options, including a payment plan, but the window is short and you should act the week it arrives.

What should you do in the first week?

1. Keep the envelope. The postmark and the notice date matter.
2. Find the return for that tax year and every document that went with it.
3. Pull the record the IRS is pointing to: the W-2, the 1099, the bank statement, the closing statement.
4. Compare what the IRS says with what you filed. Write down where they differ.
5. Decide whether you agree, partly agree, or disagree, and reply in writing before the date on the letter.

If you need help with any of those steps, our tax audit support and notice response service covers exactly this. We help you understand the notice, gather the records, and prepare the written reply.

What should you not do?

Do not ignore it. A notice does not go away because the envelope stays sealed, and the next letter in the chain is usually worse than the one before it.

Do not call the IRS without your paperwork in front of you. You will wait on hold for a long time and then be asked questions you cannot answer from memory.

Do not pay a proposed amount just to make it stop if you think it is wrong. Once you agree to a CP2000, changing it later means filing an amended return, which is more work than replying correctly the first time. Our prior year and amended returns page explains what that involves.

Do not send original documents. Send copies and keep the originals.

Do not sign up with a company that promises to settle your tax debt for pennies on the dollar. If your situation calls for someone who can speak to the IRS for you, we will say so. Only certain people, such as an enrolled agent or an attorney, may represent a taxpayer before the IRS, and we can refer you when that is the right move.

What if the letter is about a year you never filed?

That is a different problem with its own order of operations, and a CP14 for a year you never filed usually means the IRS prepared a return for you using only the income it knew about. The fix is to file the real return. It is more work up front, and it is almost always the smaller bill.

When to call

Call us at (818) 401-7468 as soon as the letter arrives, not the week it is due. The earlier we see it, the more choices you have. You can also reach us through the contact page and bring the letter with you to the office.