Getting mail from the IRS is stressful, but not all IRS letters are scary! Sometimes the letter is sent to request information, to inform you that the IRS has made changes to your tax return, or to tell you that there is a delay in processing your tax return.

To help calm your nerves, in today’s post, I’m outlining the most common IRS notices the average taxpayer or small business owner might receive. For each notice, I’ll use plain language to explain what it means, and I’ll provide you with the next steps you should take if you get one.

CP2000, Letter 2030, CP2501, and Letter 2531: Proposed Change to Your Tax Return

Explanation:

The CP2000 notices and related letters are notices of changes the IRS is proposing to make to your tax return. If you’ve received one of these, it means that the IRS found an income or payment discrepancy between what you reported on your tax return and information they received from third parties through W-2s, 1099s, or other financial information reports.

Typically, people receive this notice because they’ve underreported their income, which is often due to recordkeeping mistakes. This is not an audit notice, and it’s not a bill. Instead, it’s a proposed adjustment, and it will also explain the discrepancy or where the discrepancy came from.

Next Steps:

Compare the IRS numbers on the CP2000 to your tax return and documentation. Then, your next steps will depend on if the notice asks you to respond.

If the notice requires a response, complete the form and return it. If you agree with the notice, then even if you need to respond, you typically won’t need to amend your return. If you disagree with the notice, make sure you provide any supporting documents you have. If you don’t respond or you’re not able to explain the issue, the IRS may send you another notice or a bill.

If the notice doesn’t require a response, then follow any other steps given in the instructions.

CP11: Amount You Owe Has Changed

Explanation:

The IRS sends a CP11 notice if they have corrected something on your return and determined that you now owe money because of that correction. The notice will explain what changed and why.

Next Steps:

You should verify the changes, and if you agree, you’ll need to pay the amount you owe or contact the IRS to set up a payment plan. If you disagree, you’ll need to respond to the IRS with proof showing why you disagree.

CP12 and CP13: Adjusted Return or Refund Amount Changed

Explanation:

The IRS sends a CP12 notice if they corrected your return and you are now due a refund or the amount of your refund changed. They send a CP13 notice if they adjusted your return but your balance didn’t change.

Next Steps:

You should confirm the information in the notice. If the notice says that you’ll receive a refund, it typically takes 4 to 6 weeks to receive that money. You’ll want to follow up if you don’t see it hit your account in that timeframe. If you disagree with the information in the notice, then you should call the number on the notice to discuss the discrepancy.

CP14: Tax Bill

Explanation:

CP14 is a formal bill that shows the amount you owe the IRS for taxes, penalties, and interest.

Next Steps:

Don’t ignore this bill because interest and penalties will continue to accrue if you do. If you disagree with the amount listed, you should contact a CPA for advice and work with the IRS to resolve the discrepancy. Otherwise, you should pay the bill or request an installment agreement.

CP501, CP503, CP504: Tax Bill Reminders

Explanation:

These 3 notices are reminder notices that you owe a tax bill. CP501 is the initial reminder, CP503 is the second reminder, and CP504 is the final reminder you’ll receive if you still owe. The CP504 also explains that you’ll have 30 days from the date on that notice to make payment arrangements with the IRS before they may seize (levy) your property or rights to your property and apply it to the amount you owe. This can include seizing your wages, income, bank accounts, car, home, or Social Security benefits.

Next Steps:

Don’t ignore these notices. If you disagree with the amount listed, you should contact a CPA for advice and then work with the IRS to resolve the discrepancy. Otherwise, you should pay the bill or request an installment agreement.

LT11 and CP90: Levy Notices

Explanation:

The LT11 and CP90 notices inform you that the IRS intends to seize (levy) your assets. This can include seizing your wages, income, bank accounts, car, home, or Social Security benefits.

If this happens, the IRS will also file a Notice of Federal Tax Lien with your creditors and a message will likely appear on your credit report, which will hurt your credit rating.

Additionally, if you owe a seriously delinquent tax debt over a certain amount, the U.S. Department of State may also revoke your passport or refuse to issue you a new passport or renew your existing passport.

Next Steps:

Do not ignore these notices. These are very serious. You should speak to a CPA immediately and contact the IRS immediately to stop any pending levy actions. You can also use Form 12153 to request a Collection Due Process (CDP) hearing.

CP75: Audit Notice

Explanation:

The CP75 is the notice you’ll receive if you’re being audited by the IRS. The notice will ask you to verify the information on your tax return by sending in documents to prove the information you entered or claimed on your return. The notice may also propose changes to your tax return.

Next Steps:

Don’t ignore this notice. You should contact a CPA if you have questions or if you’ve noticed problems with your tax return or the documents you’ve been asked to provide. Make sure you respond to the notice and contact the IRS by the date they give you. If you’ve been asked to send documentation, they will give you a link that you can use to provide those documents online.

What if I received a letter that says it’s from the IRS, but I think it’s a scam?

If you received a suspicious letter, call the IRS at 1-800-829-1040 to report it. Unless an IRS agent or representative that you’ve called has told you that the letter is legitimate, then don’t do anything the letter says. You should never provide your personal or financial information to anyone until you’re certain the request is legitimate.

Abridged by Amy

If you’ve received a notice from the IRS, take a deep breath and then follow these steps:

• Read the notice a couple of times to make sure you understand what it’s saying or asking.
• If the notice is on my list above, then make sure you read the explanation and next steps I’ve provided.
• If it’s not, then go to the IRS website to search for any extra information they may have to explain the letter or notice.
• Take note of any deadlines the letter provides and mark those on your calendar.
• Don’t ignore the letter or throw it away. Take action immediately, especially if the IRS is asking for a response or asking for you to provide information or records to them.
• Keep the notice or letter in your records.
• If you owe a tax bill, make sure to research your payment options, especially the Debt Forgiveness Program.
• If you’re unsure what to do next, or if you don’t agree with the IRS, contact a CPA who can help you navigate your particular situation and come up with the best resolution possible.