Understanding Your IRS Notice
When you receive an IRS notice, the first reaction is to panic and want to toss the envelope into the trash can! We recommend that you don’t do that but instead, take a deep breath and keep the following in mind:
- An IRS notice typically will be about your federal tax return or tax account. It will be about a specific issue, such as changes to your account. It may ask you for more information. It could also explain that you owe tax and that you need to pay the amount that is due.
- Each notice has specific instructions, so read it carefully. It will tell you what you need to do.
- If you agree with the notice, you usually don’t need to reply unless it gives you other instructions or you need to make a payment.
- If you do not agree with the notice, it’s important for you to respond. You should write a letter to explain why you disagree. Include any information and documents you want the IRS to consider. Mail your reply with the bottom tear-off portion of the notice OR respond via fax if a number is provided.
- Always keep copies of any notices you receive with your other tax records.
There are dozens of IRS notices that one can receive; for a comprehensive list check out this link on the IRS’ website. Listed below is a brief summary of some of the more common notices and a description of what they mean.
CP10: The IRS made a change(s) to your return because they believe there’s a miscalculation. This change affected the estimated tax payment you wanted applied to your taxes for next year.
CP11: The IRS made changes to your return because they believe there’s a miscalculation. You owe money on your taxes as a result of these changes.
CP14: This IRS sent you this notice because you owe money on unpaid taxes.
CP54G: Your tax return shows a different name and/or ID number from the information the IRS has for your account.
CP2000: The income and/or payment information the IRS has on file doesn’t match the information you reported on your tax return. This could affect your tax return; it may cause an increase or decrease in your tax, or may not change it at all.
CP2005: The IRS accepted the information you sent them. They’re not going to change your tax return and have closed their review of it.
CP2501: You need to contact the IRS as they have received information not reported on your tax return.
Form 668Y: Notice of Federal Tax Lien.
CP501: You have a balance due (money you owe the IRS) on one of your tax accounts.
CP503: Reminder notice that the IRS has heard from you and you still have an unpaid balance on one of your tax accounts. Typically sent 30 days after the filing of a tax lien.
CP504: Notice of intent to level. If you do not pay the amount due immediately, the IRS will seize (levy) your property and apply it to pay the amount you owe. Typically sent 30 days after the above notice.
LT1058: Final Notice prior to levy. If no response is received within 30 days, the IRS can levy you. This is also your opportunity to request a hearing with regards to the matter.