You Got a Letter From the IRS. Here's Exactly What to Do (and Not Do)

The envelope says Internal Revenue Service, your stomach drops, and — if you’re like a remarkable number of people — the letter goes into a drawer, unopened, to radiate anxiety for six weeks. That drawer move is the single most expensive mistake in tax administration. Here is what’s actually happening and the playbook that handles it.

First truth: it’s almost certainly a computer

The overwhelming majority of IRS mail is automated. A document you didn’t report (or reported differently) tripped the matching system; a payment didn’t land where the computer expected; a number needs verification. Audits — actual examinations by actual humans — are rare, and they don’t begin with a vague scary letter; they begin with a specific one naming the tax year and items under exam.

Second truth: the IRS never initiates contact by phone, text, or email demanding payment. Anyone calling about your “case” with urgency and gift cards is a criminal. Real tax problems arrive by mail, move slowly, and cite notice numbers.

Read the notice number — it tells you the genre

Top or bottom right corner: CP or LTR followed by digits. The common ones:

CP2000 — the matching notice. “Our records show income your return didn’t.” Often it’s a 1099 you missed; often it’s right about the income but wrong about the tax — the classic being stock or crypto sales assessed at zero cost basis, taxing your entire proceeds as gain. A CP2000 is a proposal, not a bill. You can agree, partially agree, or dispute with documentation.

CP14 / CP501-503 — balance due series. Escalating politeness about the same debt. Interest runs the whole time.

CP504 / letters with “intent to levy” language — the serious tier where liens and levies become real and response deadlines carry legal weight. This is professional-help territory, immediately.

Math error and refund-adjustment notices — the IRS changed something; verify before accepting, because their corrections are wrong often enough to check.

New Jersey and New York run parallel systems, and the states are, frankly, faster and more aggressive on collection than the IRS. A state notice deserves the same playbook at higher speed.

The playbook

Step 1 — Open it today. Every option gets worse with age; several expire at 30, 60, or 90 days.

Step 2 — Compare the notice to your filed return before believing either one.

Step 3 — Never just pay a proposed amount to make it stop. We regularly cut proposed CP2000 balances by 70–100% by supplying the basis or documentation the computer didn’t have.

Step 4 — Respond in writing, by the deadline, keeping copies — certified mail or the IRS online response tools. Phone hold times are a tax of their own.

Step 5 — Know about first-time penalty abatement. A clean three-year compliance history often erases failure-to-file/failure-to-pay penalties on request. The IRS does not volunteer this.

Step 6 — If the letter proposes real money, involves multiple years, or uses the words levy, lien, or examination — bring in a CPA before responding. A professional response in round one shapes everything after; cleanup after a bad self-response costs more than the response would have.

What not to do

Don’t ignore it. Don’t call the number on a phone message (call the one on the printed notice, or better, let your CPA use the practitioner line). Don’t send originals. Don’t miss a deadline because you were “gathering everything” — a timely partial response beats a late perfect one.

Romanchuk CPA LLC responds to IRS, NJ, and NY notices for clients year-round — often resolving matching notices for less than the proposed penalty alone. Forward us the letter the day it arrives: rfg.tax.

This article is general information, not tax advice for your specific situation.