How to Respond to an IRS Letter Without Panicking

An envelope from the IRS is stressful, but most letters are routine and can be resolved by mail. Here's how to handle one.

Confirm it's real: The IRS starts contact by mail, not by text, email or social media, and it never demands payment by gift card or wire transfer. If in doubt, find the phone number on IRS.gov rather than using the one in a suspicious message.

Find the notice number: Look in the top or bottom right corner for a code like CP2000, CP14 or LTR 525. Search that number on IRS.gov ("Understanding your IRS notice or letter") to see what it means.

Check the deadline: Most notices give 30 to 60 days to respond. Missing it can limit your options, add penalties and interest, or move the case toward collection.

Compare it with your return: Many notices, like a CP2000, mean the IRS received an income form that doesn't match what was reported. Pull your copy of the return and the forms involved, and see whether the IRS is right.

If you agree: Sign and return the response form, and pay or set up a payment plan if you can't pay in full. Interest keeps growing until the balance is paid.

If you disagree: Respond in writing by the deadline. Explain why, include copies (never originals) of the supporting documents, and keep proof of mailing.

Ask about penalty relief: If this is your first penalty in three years and your filings are current, you may qualify for first-time abatement. Reasonable cause, such as a serious illness or a disaster, can also qualify.

Don't ignore it: Unanswered notices escalate. If the letter involves an audit, large amounts or multiple years, get help from a tax professional early.

- Robert Allen Bautista, independent tax preparer, Kansas City

Need help? See my tax and bookkeeping services, or book a free consultation.