Common IRS Notices and What to Do About Them
Receiving a letter from the IRS can be stressful, but not every notice means there’s a serious problem. In fact, many are routine and can be resolved with simple steps. Understanding why you received a notice and knowing how to respond appropriately can help you avoid unnecessary stress and potential penalties. Here’s a breakdown of some of the most common IRS notices and what you should do if one lands in your mailbox.
1. CP2000 – Underreported Income Notice
Why you received it: The IRS sends a CP2000 notice when the income reported on your tax return doesn’t match what was reported to the IRS by employers, banks, or other entities.
What to do:
Review the notice carefully and compare it with your tax return.
If the IRS is correct, you may need to file an amended return or pay the additional tax.
If you disagree, you have the right to respond with supporting documentation.
Typically, you have 30 days to respond, so don’t delay.
2. CP14 – Balance Due Notice
Why you received it: This notice is sent when the IRS believes you owe unpaid taxes.
What to do:
Verify the amount owed by comparing the notice with your tax return.
If you agree, pay the balance in full or set up a payment plan through the IRS website.
If you believe there’s an error, contact the IRS or a tax professional for assistance.
3. CP90/CP297 – Final Notice of Intent to Levy
Why you received it: This is a serious notice indicating that the IRS plans to seize your assets to satisfy a tax debt.
What to do:
Act immediately—this notice gives you 30 days to respond before the IRS takes enforcement action.
If you cannot pay, consider requesting an installment agreement, offer in compromise, or temporarily delaying collection due to financial hardship.
Seeking professional help is highly recommended if you receive this notice.
4. CP501/CP503 – Reminder Notices for Unpaid Taxes
Why you received it: The IRS sends these notices as reminders that you have an unpaid tax balance.
What to do:
Pay the balance as soon as possible to avoid penalties and interest.
If you can’t pay in full, explore payment options such as an installment agreement.
Ignoring these notices can result in more aggressive collection actions.
5. CP504 – Final Notice Before Levy Action
Why you received it: If you haven't responded to earlier notices about unpaid taxes, the IRS sends this warning that they may seize your assets.
What to do:
Contact the IRS immediately to arrange payment or negotiate a resolution.
Consulting a tax professional can help you explore relief options.
Ignoring this notice could lead to wage garnishment or bank levies.
6. LT11 – Notice of Intent to Levy
Why you received it: Similar to CP90, this notice warns that the IRS may seize assets if you don’t take action.
What to do:
Contact the IRS immediately to discuss resolution options.
If you disagree with the amount owed, you may request a Collection Due Process (CDP) hearing.
Working with a tax professional can help you navigate this situation effectively.
7. CP161 – Request for Payment Notice
Why you received it: The IRS believes there is a discrepancy in the amount of taxes you owe versus what you paid.
What to do:
Review your payment records to confirm accuracy.
If you agree, pay the balance or arrange a payment plan.
If you believe the IRS made an error, provide documentation and request a correction.
8. CP523 – Defaulted Installment Agreement Notice
Why you received it: This notice is sent when you have missed payments on your IRS installment agreement.
What to do:
Contact the IRS immediately to discuss reinstating the agreement or adjusting payments.
If you are experiencing financial hardship, you may qualify for a lower payment or a temporary pause in collections.
How to Handle Any IRS Notice with Confidence
Don’t panic. Receiving an IRS notice doesn’t necessarily mean you’re in trouble.
Read the notice carefully. Understand what the IRS is requesting and the deadline to respond.
Verify accuracy. Compare the notice with your tax records before taking action.
Respond promptly. Many notices require action within 30 days to avoid further penalties.
Seek professional help if needed. A tax professional can help you navigate complex notices and negotiate with the IRS on your behalf.
Final Thoughts
IRS notices can be intimidating, but they don’t have to be overwhelming. By understanding the common types of notices and taking prompt, informed action, you can resolve most issues efficiently. If you ever receive an IRS notice and aren’t sure how to proceed, consulting a tax professional can provide clarity and peace of mind.
At Remote Tax Advocates, we specialize in IRS Notice Support, Tax Consulting, and Transcript Retrieval to help taxpayers resolve IRS concerns with confidence. If you’ve received a notice and need guidance, reach out to us—we’re here to help!