An IRS letter is stressful, but most notices are routine and nearly every tax problem has a defined path to resolution. What makes problems expensive is delay: penalties and interest keep accruing, response windows close, and collection escalates on a predictable schedule. The first step is always the same: read exactly what the notice says, and do not miss its deadline.
The notices we see most
- CP2000: a proposed adjustment because income reported to the IRS by third parties did not match your return. It is a proposal, not a bill, and it can be agreed with, partly agreed, or disputed with documentation.
- CP14: a first notice that a balance is due.
- CP501, CP503, and CP504: escalating reminders, with the CP504 warning that the IRS may levy certain assets such as a state tax refund.
- LT11 or Letter 1058: the final notice of intent to levy, which also gives you the right to a Collection Due Process hearing if requested within 30 days.
- Audit letters: correspondence audits handled by mail, or office and field examinations that require a meeting.
Response windows, commonly 30 days, protect important rights, including the right to dispute a proposed assessment or to request a hearing before a levy. Missing them narrows your options considerably.
Representation
With a signed Form 2848 power of attorney, we deal with the IRS on your behalf: pulling your account transcripts, calling the right unit, responding to notices, and attending audit meetings. Transcripts often reveal problems the letters do not mention (unfiled years, misapplied payments, or penalties that qualify for removal) so we review the full account before responding to any single notice.
Options when you owe
- Short-term payment plan: up to 180 days to pay in full, with interest but limited setup cost.
- Installment agreement: monthly payments over a longer term. Individuals with smaller balances can often qualify for a streamlined agreement without detailed financial disclosure.
- Offer in Compromise: settling for less than the full amount, based on your reasonable collection potential. It suits a narrow set of situations, and we tell you honestly whether yours is one.
- Currently Not Collectible status: a temporary pause on collection when paying would leave you unable to meet basic living expenses.
- Penalty abatement: removal of penalties under First Time Abate for taxpayers with a clean prior three years, or for reasonable cause such as serious illness or disaster.
Unfiled returns come first
The IRS generally will not agree to any payment arrangement while required returns are missing. If you have unfiled years, we reconstruct income from IRS transcripts and your records, prepare the returns, and replace any substitute returns the IRS filed for you, which are usually based on gross income with none of your deductions. Filing almost always reduces the balance before resolution even begins. Tax preparation handles current and prior-year returns together.
Audits
Most audits are narrower than people fear, focused on specific items such as income, vehicle use, or large deductions. We prepare a response that answers exactly what was asked, organized with supporting records, and we handle the communication so you do not have to explain your return in a meeting. Clean books make audits far shorter, which is one reason monthly bookkeeping is the best long-term protection.
Payroll tax problems
Unpaid payroll taxes are treated more seriously than income tax, because the withheld portion belongs to employees. The IRS can hold owners and other responsible people personally liable through the Trust Fund Recovery Penalty. If deposits have fallen behind, the priority is stopping the problem from growing (usually by moving payroll to a compliant payroll service), while negotiating the back balance.
How long the IRS has to collect
The IRS generally has ten years from the date a tax is assessed to collect it, though certain actions (including some payment requests and bankruptcy) pause that clock. Knowing exactly where each year stands on that timeline affects which resolution option makes sense.
What to do the day a notice arrives
- 1Find the notice number in the top or bottom corner and the response date in the body.
- 2Do not pay a proposed adjustment until you know it is correct: many are partly or fully wrong.
- 3Gather the return the notice refers to and any records related to the item in question.
- 4Get a professional review well before the deadline, so there is time to respond properly or request more time.
State tax notices
State tax agencies follow the same patterns as the IRS, often on shorter timelines, and many receive income adjustments directly from the IRS. A federal change usually needs to be reported to the state as well. We handle state income, payroll, and sales tax notices alongside federal ones, so the same facts are presented consistently to every agency.
Identity verification and fraud letters
Some letters are not about money at all. Letters such as 5071C ask you to verify your identity before the IRS processes a return, often because a return was flagged as potentially fraudulent. Respond only through the official channels listed on irs.gov, never through links in an email or text, since the IRS does not start contact that way. If someone filed a return in your name, we help you file the identity theft affidavit and get your own return processed.
Preventing the next notice
Most resolution cases begin with a missed estimated payment or a late return. Once the current problem is settled, we set up quarterly estimated payments and a filing calendar so it does not happen again. If you have a notice now, send it to us: the earlier we see it, the more options remain.