Common IRS Notices and What They Mean

CP2000 – Notice of Proposed Adjustment for Underpayment/Overpayment

The IRS found a mismatch between income reported on your tax return and information from third parties (like W-2s or 1099s). This is a proposal for changes to your return, not a bill.

CP501 – Reminder: Balance Due

A first reminder that you have a balance due on your tax account. It provides payment options and information about your rights.

CP503 – Second Request: Balance Due

A follow-up reminder if you do not respond to the CP501 notice. It warns that the IRS may file a federal tax lien if you do not respond.

CP504 – Notice of Intent to Levy

An urgent notice stating that you still have an unpaid balance. The IRS intends to levy (seize) your state tax refund and may take other collection actions if you do not pay immediately.

Letter 5071C – Request for Identity Verification

Sent when the IRS suspects potential identity theft related to a tax return filed under your name or Social Security number. You must verify your identity before the IRS will process your return.

Letter 4883C – Request for Additional Information to Process Your Return

Similar to Letter 5071C, this letter is sent when the IRS needs to verify your identity due to potential identity theft. You must call the IRS to confirm your identity.

Letter 1058 / LT11 – Final Notice of Intent to Levy and Notice of Your Right to a Hearing

A final notice before the IRS takes enforcement action to collect unpaid taxes, such as levying your wages or bank accounts. It also informs you of your right to request a Collection Due Process hearing.

CP14 – Balance Due

The initial notice sent when you have a balance due after filing your tax return. It details the amount owed and provides instructions for payment.

CP2501 – Request for Explanation of Income Discrepancy

Sent when the IRS detects a discrepancy between the income reported on your return and information received from third parties, but does not yet propose a tax change. The IRS requests an explanation or supporting documentation.

How to Respond to Common IRS Notices

  • Read the notice carefully and follow all instructions.

  • Respond by the deadline (usually 10–30 days) to avoid additional penalties or loss of appeal rights.

  • Provide complete and accurate information and include any requested documentation.

  • Keep copies of all correspondence and documentation sent to the IRS.

  • Send responses by certified mail with return receipt or use the IRS document upload tool or fax, if available.

  • Contact the IRS if you need more time or have questions (use the number on your notice).

Specific Response Tips

  • CP2000/CP2501: If you agree, sign and return the response form with payment. If you disagree, provide a detailed written explanation and supporting documentation. Do not file an amended return in response to these notices.

  • CP501/CP503/CP14: Pay the amount due or contact the IRS to discuss payment options. Early payment reduces penalties and interest.

  • CP504/Letter 1058/LT11: This is a final warning before enforced collection. Pay the amount due, set up a payment agreement, or request a Collection Due Process hearing if you disagree.

  • Letter 5071C/4883C: Follow the instructions to verify your identity, either online or by phone. Have your prior year tax returns and supporting documents ready.

Best Practices and Common Pitfalls

Best Practices:

  • Respond promptly and keep thorough records.

  • Provide all requested information and documentation.

  • Follow up if you do not receive confirmation or a response from the IRS.

  • Know your rights to appeal or request payment alternatives.

Common Pitfalls:

  • Ignoring the notice or missing deadlines.

  • Providing incomplete or inaccurate responses.

  • Not documenting communications.

  • Failing to explore payment or appeal options.

Summary:

Timely and accurate responses to IRS notices are critical. Always review the notice, gather supporting documentation, respond by the deadline, and use secure methods to send your response. If you disagree with the IRS, provide a clear explanation and request an appeal if necessary. For identity verification letters, follow the specific instructions provided. Taking prompt action helps resolve issues efficiently and minimizes penalties and interest.

If you have questions about an IRS notice or need help responding, contact our team today.