Got an IRS Letter? Start Here Before You Panic
How to Understand IRS Notices and What to Do Next. Receiving a letter from the IRS is stressful—no doubt about it. But take a deep breath. It’s not the end of the world, and it doesn’t always mean something terrible has happened. Many IRS letters are routine, and most can be addressed if you act early and understand what you're looking at.
This post is to help you decode what your IRS notice actually means—and what your next steps should be.
🎥 Prefer to watch? This blog post is based on my YouTube video. You can watch it here:
Got an IRS Letter? Start Here Before You Panic | Self-Help: IRS Notices
The 3 Main Types of IRS Notices. Let’s simplify the IRS notice process. Generally speaking, notices fall into three categories based on the stage of your tax issue:
🟡 1. Proposed Changes & Audit Notices (Pre-Assessment) - These notices are issued before the IRS officially adds a balance to your account. They are meant to notify you of a possible issue and give you a chance to respond.
Notice CP2000 is an example of the notice that proposes the changes to the taxpayer’s tax return. The IRS can issue CP2000 Notice when they detected a mismatch between what you reported and what third parties (like employers or banks) submitted. You can agree, disagree, or provide clarification—before the tax is assessed.
🟠 2. Balance Due Notices (Assessment Notices) - Once the IRS decides and officially assesses a tax or penalty, it sends a notice showing the amount you owe.
Notice CP14 is an example of the balance due notice. This is the IRS’s first notice after assessing a balance. It reflects a finalized amount due on your account, including taxes, penalties, or interest.
🔴 3. Collection Notices (Post-Assessment) - After the IRS issues a balance-due notice, it actively seeks payment. These notices escalate in urgency and can eventually lead to liens or levies.
Notice CP501 is a reminder that your balance is unpaid. Later notices like CP503, CP504, or Letter 1058 indicate more serious collection efforts are underway.
What to Check in Any IRS Letter. Before you panic, take a few moments to review these key parts of your notice:
Name and Address on the Notice - Confirm that the notice is addressed to you rather than somebody else, like your neighbor.
Notice Number - Located in the top or bottom right corner (e.g., CP14, CP2000). This helps identify the type and purpose of the notice.
Tax Year Involved - Confirm it’s referencing a tax year you actually filed. Don’t confuse this with the date the notice was sent.
Explanation or Reason - Some notices provide a brief explanation. Others are vague, and you may need to investigate the Notice Number, call the IRS or ask a tax professional.
Amount Owed - Look at the breakdown: is it tax, penalties, interest, or just a proposed change?
Deadline to Respond or Pay - This is one of the most important elements of the IRS notice. Most notices require a response within 30 days. But the period varies. If you miss the deadline to respond, your options could narrow significantly.
Every IRS Letter Requires Attention—Even If You Can’t Pay. Let me be clear: ignoring an IRS notice is not a strategy. Even if the amount is small or you can’t pay right now, your situation will likely worsen if you do nothing.
Here are common response options:
Call the IRS.
Respond by mail with documents or explanations.
Get professional help.
In some cases, take no action (if instructed)—but only when appropriate.
Failure to respond could lead to:
Accrued penalties and interest.
A federal tax lien.
Wage garnishment or bank levies.
Why It’s Smart to Learn This Early. The IRS works through a system. It’s not always intuitive, but it is predictable. The sooner you understand where your notice fits in that process, the easier it is to respond wisely, avoid penalties, and protect your finances.
Need Help With Your IRS Notice? If you’re unsure what your letter means or how to respond, I can help. I offer consultations to review your notice and map out your options.
📅 Schedule a consultation at: Contact Us
📧 Or contact me directly
Final Thoughts
If you’ve received an IRS letter, don’t panic.
Pause. Understand. Act.
Olena Ruth | Tax Defense Attorney
Olena represents the taxpayers in federal and state tax audits, collection matters, administrative appeals, and the U.S. Tax Court’s cases. She is actively engaged in Tax Sections of the American Bar Association and Colorado Bar Association. She serves as Colorado Bar Association’s pro-bono attorney and liaison to the Internal Revenue Service. Her speaking engagements include presentations on tax matters in family law, employment tax issues, and communication with the IRS.
Olena can be reached at olena@ruthtaxlaw.com
