An IRS Letter Arrived. Here Is What to Do First.

Step one: read it carefully and identify what it is

Every notice carries a notice or letter number, typically in the upper right corner, along with the tax year and the specific issue. That number tells you what kind of communication it is — a math adjustment, a request for information, a proposed change based on third-party data, a balance due, or a verification request. Confirm the tax year first, because notices frequently concern a return filed two or three years earlier, not the most recent one.

Confirm it is genuine

The IRS generally initiates contact by mail. Unsolicited calls demanding immediate payment, threats of arrest, or requests for payment by gift card or cryptocurrency are hallmarks of scams. A legitimate notice can be verified through your IRS online account, which shows balances, notices, and transcript activity.

Step two: note the deadline before anything else

Most notices state a response window, commonly measured in days from the date of the notice rather than the date you opened it. Some deadlines are administrative and can be extended by request; others, such as the period to petition the Tax Court after a statutory notice of deficiency, are fixed by law and cannot be extended. Missing one of the fixed deadlines forecloses options that were available the week before.

Step three: check whether the IRS is actually right

A proposed change is not an assessment. Notices generated by matching third-party information returns are frequently incorrect in predictable ways: cost basis omitted from a securities sale, income reported under the wrong taxpayer identification number, a duplicate information return, or an amount already reported on a different line of the return. Compare the notice line by line against your filed return and your records before agreeing to anything.

• If the IRS is correct, responding promptly usually limits interest and additional penalties
• If the IRS is partially correct, address each item separately rather than accepting the total
• If the IRS is incorrect, respond with a clear explanation and copies of the documents that prove it
• Never send original documents; send legible copies and keep the originals

Step four: respond in writing, completely

Include the notice number, the tax year, your identifying information, a concise explanation, and the supporting documentation. Send it to the address specified on the notice, keep a complete copy, and use a delivery method that provides proof of mailing and receipt. Partial responses generate follow-up notices and restart the clock, which is how a two-month issue becomes a two-year one.

When to bring in a professional immediately

• The notice proposes a substantial adjustment or a penalty you do not understand
• It concerns foreign accounts, foreign entities, or international information returns
• It involves payroll taxes or a trust fund recovery penalty
• It is a statutory notice of deficiency, a notice of intent to levy, or a lien notice
• You have been contacted about an examination rather than a document matching issue

What not to do

Do not ignore it, and do not assume it will resolve itself. Interest continues to accrue, automated notices escalate on a schedule, and enforcement options open up at defined points. Do not call and volunteer information beyond what was asked. Do not amend a return in response to a notice without first determining whether an amended return is the correct vehicle — in many cases it is not, and filing one can confuse the record.

If you cannot pay

A balance due and an inability to pay are separate problems. Payment plans, short-term extensions, and other arrangements exist, and penalty relief may be available where there is a reasonable cause or a clean compliance history. The important point is that these options are far easier to arrange while the account is current in the process than after collection activity has begun.

Sources and official references

• IRS — Understanding Your IRS Notice or Letter
• IRS — Taxpayer Bill of Rights
• IRS — Penalty Relief
• Taxpayer Advocate Service