Jo Willetts, EA
Director, Tax Resources
Published on: March 20, 2020
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Thankfully, IRS notices and letters are pretty clear about their purpose and what they want you to do, if action is needed. They also have a handy code in the top or the bottom right-hand corner that you can look up on the IRS site, or give to a tax professional who may be assisting you. Notice codes start with CP and letter codes with LTR. At least that’s straightforward!
You could receive a letter or notice because (example notices):
You have an installment payment due (CP521),
You owe money to the IRS (CP504)
Your refund amount is more or less than you thought (CP134R)
There may be a delay in processing your return (CP44)
Your return is missing a schedule or form and can’t be processed without it (CP180, CP181)
Be aware that fake letters or notices may be sent by people hoping to get personal information from you. This is called phishing. If something you receive looks suspicious or just doesn’t seem right, we suggest looking for an IRS code and an IRS contact number, which should be in the top right-hand corner of the notice or letter. You can call that number, or this one, if you think a letter may be fraudulent: 800-829-1040. When you get through, follow the IRS assister's prompts or visit their Report Phishing page to find out more.
Unfortunately, there are plenty of “phish” in the sea, but we’ve put together a list of the dirtiest tricks, how to spot and avoid them, and how to report them. See our article, 8 Common Types of Tax Scams to Watch for in 2020, for advice and helpful tips.
But, if you don’t agree with the information supplied, changes to your return, or an amount due in your notice, then you will need to respond to the IRS, and possibly also involve a tax professional.
The main thing you shouldn’t do when you have received an IRS letter or notice is ignore it! Ignoring an IRS notice is a great way to cost yourself extra money, among other things. Do yourself a favor and take the actions necessary to resolve the issue before it becomes much more complicated or costly.
Pay attention to due dates: missing a deadline can lead to increased interest and penalty fees—even the loss of your right to appeal an IRS decision.
Call, don’t write: Unless you’ve been specifically asked to mail something to the IRS, calling them is a better means of contact. If you write to the IRS, it can take 30 days to receive an answer! Use the number on your notice, if you need to discuss your notice with the IRS. Likewise, use the fax number provided to send any requested information.
Each letter or notice (at least legitimate ones) should have a code in the top or bottom right-hand corner.
|CP12||Mistakes corrected; overpayment identified.||Compare changes to tax return, update return in your records/contact the IRS within 60 days|
|CP501||Balance due.||Make payment/Call if you disagree; setup/revise payment agreement|
|CP502||Second reminder of balance due.||Pay as much as possible in order to minimize additional penalties and interest.|
|CP2000||Income or payment information doesn’t match return.||Complete response form/follow instructions/Contact information provider|
|CP71C||Reminder of tax, penalty and/or interest owed; also used to explain denial of or revoked passport.||Make payment arrangements, speak with a tax debt resolution specialist|
|CP523||Notice of intent to terminate installment agreement and seize assets due to delinquent payments.||Pay before termination date; contact IRS and possibly a tax debt resolution specialist|
|LTR3172||Notice of federal tax lien filing, your rights to a hearing
Request appeals consideration, contact a tax professional
|Complete form 4089(Notice of Deficiency – Waiver) and return with payment/Mail additional information/Challenge the increase; consult a tax professional|
|LTR3219b||Notice of Deficiency; the IRS intends to assess a tax deficiency (money due)|
In general, the following steps are key to resolving a tax issue with the least amount of headache:
Read each notice or letter carefully.
Review your tax return to compare information.
Respond with one of the appropriate actions ASAP, or at least by the due date.
Retain the notice or letter for your tax records, for reference, or for any professionals who may end up assisting you.
Remember that you don’t have to deal with this all by yourself!
You’re not expected to know or understand tax laws and IRS jargon—that’s our job! Jackson Hewitt has expert Tax Debt Resolution Specialists who can deal with any tax situation.
We’ll help you stay on top of your returns (including amended or corrected), respond correctly and fully to notices and letters, and work with the IRS to get the best possible resolution for you, while working to protect your finances. Have a tax issue to discuss? Contact us now!
About the Author
Jo Willetts, Director of Tax Resources at Jackson Hewitt, has more than 35 years of experience in the tax industry. As an Enrolled Agent, Jo has attained the highest level of certification for a tax professional. She began her career at Jackson Hewitt as a Tax Pro, working her way up to General Manager of a franchise store. In her current role, Jo provides expert knowledge company-wide to ensure that tax information distributed through all Jackson Hewitt channels is current and accurate.