I Received an IRS Notice — What Should I Do First?

Received a letter from the IRS? Start by identifying exactly what the IRS is asking, the tax year involved, and the response deadline. Do not assume that every IRS notice means you need an expensive tax-resolution program.

Some notices require a simple response. Others involve unpaid taxes, unfiled returns, proposed collection action, or deadlines that can affect your rights.

The important thing is to understand the problem before deciding how to solve it.

What should I do first after receiving an IRS notice?

Start with these five steps:

1. Open and read the entire notice.

2. Find the notice or letter number.

3. Identify the tax year or period involved.

4. Find the response or payment deadline.

5. Determine exactly what the IRS says happened.

The IRS advises taxpayers to review notices carefully, keep them with their records, and respond by the stated deadline when a response is required. Missing certain deadlines can affect your ability to dispute an IRS action or preserve appeal rights.

Why did the IRS send me a letter?

An IRS notice does not automatically mean you're facing a levy, lien, or major tax problem.

The IRS sends notices for many reasons, including:

• A balance is due.

• The IRS changed or corrected a tax return.

• The IRS needs additional information.

• There is a question about a tax return.

• The IRS needs to verify your identity.

• A refund amount changed.

• A tax return may be missing.

The notice should identify the specific issue and explain what the IRS expects you to do.

Where do I find the IRS notice number?

Look for a number beginning with CP or LTR on the notice.

Examples of IRS notices include CP notices and numbered IRS letters.

That number matters because different notices have different purposes, deadlines, and consequences.

Instead of simply asking:

“Why did I get a letter from the IRS?”

A better question is:

“What notice did I receive, what tax period does it involve, and what action is the IRS requesting?”

Should I ignore an IRS notice if I can't pay?

No.

Not being able to pay the balance does not make the notice disappear.

If the notice requires action, responding appropriately can be important even when you cannot pay the full amount.

The IRS states that taxpayers who owe a balance should pay what they can by the due date because doing so can reduce additional penalties and interest.

But inability to pay in full does not necessarily mean you have to solve the entire problem immediately.

Depending on the circumstances, IRS collection options can include an installment agreement, a partial-pay installment agreement, Currently Not Collectible status, or an Offer in Compromise.

The right option depends on the facts.

See following links:

Online Payment Agreement: https://www.irs.gov/payments/online-payment-agreement-application

IRS Direct Pay: https://directpay.irs.gov/directpay/payment?execution=e1s1

Offer in Compromise Pre-Qualifier: https://irs.treasury.gov/oic_pre_qualifier/

Get My IRS Transcripts: https://www.irs.gov/individuals/get-transcript

Taxpayer Advocate Service: https://www.taxpayeradvocate.irs.gov/

What if I disagree with the IRS notice?

Do not automatically pay a notice simply because it came from the IRS.

Compare the notice with your tax return and records.

If you disagree, the notice should explain how to respond and where to send supporting information. Pay close attention to the deadline.

Some IRS notices provide important administrative or appeal rights that can be lost if you wait too long.

What if the IRS says I didn't file a tax return?

A missing-return notice deserves attention.

For example, the IRS uses notices such as CP515 to inform taxpayers that it has no record of receiving a required prior-year return.

If you were required to file, getting the missing return completed may need to happen before a collection resolution can be established.

And there is an important distinction:

Filing the return and paying the tax are two separate issues.

If you cannot pay everything when the return is filed, that does not necessarily mean you should continue leaving the return unfiled.

Does an IRS notice mean the IRS can levy my wages or bank account?

Not every IRS notice authorizes a levy.

IRS collection generally progresses through a process, and the particular notice you've received matters.

Some collection notices can involve federal tax liens, proposed levies, appeal rights, or other collection actions.

That is why identifying the exact notice and deadline is more useful than simply knowing that you “received something from the IRS.”

Timing may be especially important, if the notice mentions terms such as:

• Intent to Levy

• Final Notice

• Collection Due Process

• Federal Tax Lien

• Notice of Federal Tax Lien

• Appeal Rights

Do I need to call the IRS immediately?

Not necessarily.

The IRS itself says there is usually no need to call simply because you received a notice. Many notices can be handled by following the instructions provided.

Before calling, it can help to have:

• The complete IRS notice

• The tax return for the year involved

• Records of payments you've made

• Prior IRS correspondence

• A basic understanding of what you're trying to resolve

Calling without understanding the account can sometimes create more confusion rather than less.

Can someone look at my IRS account without representing me?

Yes.

This is an important distinction.

IRS Form 8821, Tax Information Authorization, can authorize a designated person to inspect or receive specified confidential tax information.

That is different from Form 2848, Power of Attorney and Declaration of Representative, which is used when an eligible practitioner is authorized to represent a taxpayer before the IRS.

At Blueprint Tax Relief, we deliberately separate those stages.

Stage 1 — Understand the Account

Our IRS Account Snapshot starts at $495.

The purpose is diagnostic.

We use Form 8821 to obtain and review available IRS account information and identify items such as:

• Balances

• Tax periods involved

• Filing status

• Available transcript information

• Notices

• Collection indicators

Then we explain what the account shows in plain English.

There is no detailed financial analysis or IRS representation included at this stage.

Stage 2 — Investigate the Resolution

If the situation requires representation and deeper financial analysis, a Resolution Investigation starts at $1,500.

This is where Form 2848 and representation may begin.

Depending on the case, the investigation may involve financial information, ability-to-pay analysis, collection issues, and determining whether a resolution such as an IA, PPIA, CNC, OIC, or another strategy may fit.

Stage 3 — Resolve the Case

Once the facts and financial situation are understood, the appropriate resolution can be implemented.

The goal is simple:

Don't choose the solution before diagnosing the problem.

Do I need to hire a tax-resolution company because I received an IRS notice?

No.

Some IRS notices are straightforward enough for taxpayers to handle themselves.

Others become more complicated because of:

• Multiple tax years

• Unfiled returns

• Large balances

• Financial hardship

• Wage levies

• Federal tax liens

• Collection deadlines

• Appeal rights

• Disagreement with an IRS determination

A good first step is determining what is actually happening before committing thousands of dollars to representation.

The Bottom Line

Receiving an IRS notice can feel intimidating, but the notice itself is information.

Start by answering four questions:

• What does the IRS say happened?

• Which tax years are involved?

• What deadline applies?

• What does the IRS expect me to do next?

Once those facts are clear, you can decide whether the matter is something you can handle yourself or whether professional assistance makes sense.

Not sure what the IRS sees?

Blueprint Tax Relief offers an IRS Account Snapshot starting at $495 to help you understand your IRS account before committing to a larger tax-resolution engagement.

Jeffrey Morris, EA
Blueprint Tax Relief
Nationwide IRS Representation

This article provides general educational information and is not individualized tax or legal advice. IRS procedures and the appropriate response depend on the specific notice and facts of each case.

Additional IRS references: IRS guidance confirms that notices should be read carefully, required responses should be made by the deadline, and taxpayers should keep notices for their records. The IRS also confirms that Form 8821 authorizes a designee to inspect or receive specified confidential tax information.