How to Handle an IRS Notice Without Stress

Few things are more anxiety-inducing than seeing an envelope stamped with "Internal Revenue Service" in your mailbox. It's normal to feel a surge of panic, even if you're a meticulously organized individual who is confident everything was filed correctly. Take a deep breath, and remember: most IRS notices are routine, not emergencies. These can usually be addressed calmly and systematically once you understand what's required.

Understanding Why You Received an IRS Notice

The IRS dispatches millions of notices every year, many of which are for common, non-threatening reasons:

Document Mismatch: This occurs when forms like a 1099 or W-2 don't match your filed return, prompting an automated, non-accusatory letter.
Additional Information Needed: Perhaps a form is missing, or a simple math error was detected. These issues are generally straightforward to resolve.
Payment Issues: This might be due to misapplied or delayed payments, or differences in the recorded amounts.
Internal Adjustments: The IRS could be recalculating a refund or making updates to credits or deductions.
Identity Verification: Strengthened identity-theft protections sometimes require you to confirm your identity. These notices are informational.

Why You Shouldn't Navigate This Alone

Acting on an IRS notice without guidance is a common mistake. Hasty reactions, such as paying the stated amount, calling the IRS prematurely, or sending documents without context, can complicate matters. Your best course of action is to discuss the notice with a financial professional. They can help you determine:

Notice accuracy
If there's any amount you legitimately owe
Whether there's been an IRS error
The appropriate course of action
What documentation is necessary, if at all
If a response is even needed

Decoding Common IRS Notice Codes

Each IRS notice includes a code, like CP2000, CP14, or CP75, which helps identify the issue. Understanding these codes can demystify the notice:

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CP2000 — Underreported Income: Indicates the IRS believes there's undocumented income, often due to late or incorrect vendor filings.

CP14 — Balance Due: Shows a balance believed to be owed, which could be correct or a timing-related error.

CP75 — Audit Documentation Request: Requests proof of a credit or deduction claim.

Letter 5071C — Identity Verification: Part of fraud prevention measures.

Notice of Intent to Levy (LT11/CP504): More serious, requiring prompt action though still manageable with professional help.

Knowing what your notice entails can guide the appropriate next steps effectively.

Common Mistakes to Avoid

Handling an IRS notice correctly often leads to a smooth resolution. However, avoid these missteps:

Ignoring the notice
Contacting the IRS prematurely
Paying without verification
Sending documents without context
Assuming an audit

Resolution Steps

Share the notice with your financial professional.
They'll review to identify the trigger.
They'll verify the notice's accuracy.
They'll craft a response, if necessary.
They ensure any payment due is accurate and applied correctly.
If errors exist, they'll prepare documentation.

Reach Out for Support

Remember, you're not tasked with figuring this out alone. For those who've received IRS notices—confusing, alarming, or unexpected—reach out to our firm. We'll clarify what's happening and guide you to a resolution.

No need for panic, just a path forward with expert support.

Virtual AI

If you’re ready to get a handle on your tax situation, reach out and we’ll guide you through each step.

Let’s Sort This Out

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