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IRS Notice Resource Center:
What Your IRS Notice Means and What to Do Next
Receiving a notice from the IRS can be unsettling, particularly when the letter mentions additional taxes, liens, levies, bank accounts, wages, or other collection action. The most important thing to understand is that not every IRS notice means the same thing, and the rights and deadlines associated with each notice can be very different.
Ignoring an IRS notice rarely makes the problem disappear. Depending on the notice, failing to respond can result in additional tax being assessed, penalties and interest continuing to accrue, a federal tax lien being filed, or the IRS moving closer to enforced collection.
Below is an explanation of several common IRS notices, what they mean, what you should do, important response deadlines, and mistakes to avoid.
by industry
Real Estate Professionals
Real Estate Professionals
Being in the Real Estate business can be one of the most tax advantaged professions. Learn about the complex tax laws that can save you thousands each year.
Service Professionals
Real Estate Professionals
Many service professionals miss tax deductions every year. Let us review your tax returns to find deductions you may have overlooked.
Transportation
We specialize in helping small and large Transportation companies reduce taxes. Learn about the most commonly missed tax deductions available only to transportation workers.
Gig Workers
You work hard to earn every dollar. Learn of the many commonly missed deductions properly file taxes as a gig worker and of the many commonly missed deductions.
Notaries
Most tax preparers don't know the Special Rules for Notaries. Don't allow yourself to be over taxed this year.
Restaurant Owners
Have you opened a new location, redesigned your shop, or added a new product or service? These business investments can save on taxes.
Tax Savings Strategies
Tax Savings Strategies
Tax Savings Strategies
Learn more about tax savings strategies that you may be able to take on your next tax return.
CP2000
CP2000 – Proposed Changes to Your Tax Return
An IRS CP2000 notice is generally issued when information reported to the IRS by a third party does not match information reported on your federal income tax return.
Employers, banks, brokerage firms, payment processors, retirement plans, and other organizations report income and payment information to the IRS on forms such as:
- Form W-2
- Form 1099-NEC
- Form 1099-K
- Form 1099-INT
- Form 1099-DIV
- Form 1099-B
- Form 1099-R
When the IRS computer-matching system identifies a discrepancy, it may issue a CP2000 proposing changes to your return.
A CP2000 is a proposed adjustment. It is not itself a tax bill and is not the same thing as a traditional IRS audit.
How Long Do You Have to Respond?
The IRS generally instructs taxpayers to respond within 30 days from the date of the notice, or generally 60 days if the taxpayer lives outside the United States. Your actual CP2000 contains the response deadline that applies to your case.
What Should You Do?
First, compare the CP2000 carefully with the tax return you filed and the income documents identified by the IRS.
Determine whether:
- The income actually belongs to you.
- The IRS has duplicated an item.
- The income was already reported elsewhere on your return.
- The payer reported an incorrect amount.
- The IRS failed to account for cost basis, deductions, exclusions, or expenses.
- An amended return may be necessary.
- The IRS's proposed tax calculation is correct.
If you agree, follow the instructions provided with the notice.
If you disagree, provide a clear explanation and supporting documentation showing why the proposed adjustment is incorrect.
The IRS may accept your explanation, request additional documentation, or issue a revised proposed adjustment.
What Happens Next?
If the matter is not resolved during the CP2000 process, the IRS may eventually issue a statutory Notice of Deficiency, which can provide the right to petition the United States Tax Court.
That later deadline is extremely important and should not be confused with the initial CP2000 response period.
Common CP2000 Mistakes
- Assuming the IRS calculation must be correct.
- Paying the proposed amount without reviewing how the IRS calculated it.
- Forgetting to account for stock or cryptocurrency cost basis.
- Sending documentation without explaining what it proves.
- Filing an amended return without properly addressing the CP2000.
- Ignoring the notice because the taxpayer believes the original return was correct.
- Waiting until the deadline has passed before seeking professional help.
Key Takeaway
A CP2000 is a proposal, not necessarily the final word. Review the underlying tax return and information documents before agreeing to additional tax.
LT11
LT11 – Notice of Intent to Levy and Your Right to a HearingTax Return
An LT11 is one of the most serious IRS collection notices.
It generally means the IRS has previously attempted to collect an unpaid tax liability and is now notifying you that it intends to levy property or rights to property if the matter is not resolved.
The notice also provides important Collection Due Process, or CDP, hearing rights.
A levy may potentially affect assets such as:
- Wages
- Bank accounts
- Accounts receivable
- Certain investment accounts
- Business assets
- Other property or rights to property
How Long Do You Have to Respond?
An LT11 generally provides 30 days to request a Collection Due Process hearing.
The deadline shown on your particular notice controls.
What Should You Do?
Do not treat an LT11 as another ordinary collection reminder.
Immediately:
- Confirm the tax periods and balances involved.
- Review whether all required tax returns have been filed.
- Determine whether the balance is correct.
- Review your financial condition and available resolution strategies.
- Evaluate whether a Collection Due Process hearing should be requested.
- Address any imminent levy risk.
A CDP hearing may allow the taxpayer to present collection alternatives such as an installment agreement, Offer in Compromise, or other appropriate collection resolution.
In certain circumstances, a taxpayer may also challenge the underlying liability if there was no prior opportunity to dispute it.
What Happens Next?
If a timely CDP request is filed, the case may be reviewed by the IRS Independent Office of Appeals before the proposed levy proceeds, subject to applicable exceptions.
A timely CDP request can also preserve important judicial review rights.
Common LT11 Mistakes
- Treating LT11 like an ordinary reminder.
- Calling the IRS without first understanding the taxpayer's financial situation.
- Missing the CDP hearing deadline.
- Assuming a phone call automatically protects appeal rights.
- Sending Form 12153 to the wrong location.
- Proposing a payment amount before analyzing the taxpayer's ability to pay.
- Ignoring unfiled tax returns that may prevent a collection resolution.
Key Takeaway
LT11 is a major escalation point. The taxpayer may have valuable appeal rights that can expire if the notice is ignored.
Letter 1058
Letter 1058 – Final Notice, Notice of Intent to Levy and Notice of Your Right to a Hearing
Letter 1058 serves a function similar to LT11. It advises the taxpayer that the IRS intends to levy property or rights to property and provides Collection Due Process rights.
Letter 1058 is commonly associated with cases being handled through IRS Collection and may be issued in connection with a Revenue Officer case.
How Long Do You Have to Respond?
The taxpayer generally has 30 days to request a Collection Due Process hearing.
Always use the exact deadline printed on the letter.
What Should You Do?
Immediately determine:
- What years are included?
- Is the liability correct?
- Are all returns filed?
- Has the IRS assessed penalties that could potentially be challenged?
- Can the taxpayer pay the liability?
- Would an installment agreement, Offer in Compromise, Currently Not Collectible status, or another strategy be appropriate?
- Should Form 12153 be filed to request a CDP hearing?
What Happens Next?
If no appropriate response is made, the IRS may proceed toward levy action after applicable requirements have been satisfied.
If a timely CDP hearing is requested, the taxpayer may be able to present appropriate collection alternatives to IRS Appeals.
Common Letter 1058 Mistakes
- Missing the CDP deadline.
- Believing a pending phone conversation automatically suspends the deadline.
- Giving incomplete financial information to the IRS.
- Agreeing to an unaffordable payment arrangement.
- Ignoring business or payroll tax liabilities included in the case.
- Failing to preserve proof that an appeal request was timely submitted.
Key Takeaway
A Letter 1058 should be addressed immediately, particularly because appeal rights may be time-sensitive.
CP2000
IRS Title: CP2000 – Proposed Changes to Your Tax Return
What Is an IRS CP2000 Notice?
An IRS CP2000 notice is generally issued when information reported to the IRS by a third party does not match information reported on your federal income tax return.
Employers, banks, brokerage firms, payment processors, retirement plans, and other organizations report income and payment information to the IRS on forms such as:
- Form W-2
- Form 1099-NEC
- Form 1099-K
- Form 1099-INT
- Form 1099-DIV
- Form 1099-B
- Form 1099-R
When the IRS computer-matching system identifies a discrepancy, it may issue a CP2000 proposing changes to your return.
A CP2000 is a proposed adjustment. It is not itself a tax bill and is not the same thing as a traditional IRS audit.
How Long Do You Have to Respond?
The IRS generally instructs taxpayers to respond within 30 days from the date of the notice, or generally 60 days if the taxpayer lives outside the United States. Your actual CP2000 contains the response deadline that applies to your case.
What Should You Do?
First, compare the CP2000 carefully with the tax return you filed and the income documents identified by the IRS.
Determine whether:
- The income actually belongs to you.
- The IRS has duplicated an item.
- The income was already reported elsewhere on your return.
- The payer reported an incorrect amount.
- The IRS failed to account for cost basis, deductions, exclusions, or expenses.
- An amended return may be necessary.
- The IRS's proposed tax calculation is correct.
If you agree, follow the instructions provided with the notice.
If you disagree, provide a clear explanation and supporting documentation showing why the proposed adjustment is incorrect.
The IRS may accept your explanation, request additional documentation, or issue a revised proposed adjustment.
What Happens Next?
If the matter is not resolved during the CP2000 process, the IRS may eventually issue a statutory Notice of Deficiency, which can provide the right to petition the United States Tax Court.
That later deadline is extremely important and should not be confused with the initial CP2000 response period.
Common CP2000 Mistakes
- Assuming the IRS calculation must be correct.
- Paying the proposed amount without reviewing how the IRS calculated it.
- Forgetting to account for stock or cryptocurrency cost basis.
- Sending documentation without explaining what it proves.
- Filing an amended return without properly addressing the CP2000.
- Ignoring the notice because the taxpayer believes the original return was correct.
- Waiting until the deadline has passed before seeking professional help.
Key Takeaway
A CP2000 is a proposal, not necessarily the final word. Review the underlying tax return and information documents before agreeing to additional tax.
CP2000
IRS Title: CP2000 – Proposed Changes to Your Tax Return
What Is an IRS CP2000 Notice?
An IRS CP2000 notice is generally issued when information reported to the IRS by a third party does not match information reported on your federal income tax return.
Employers, banks, brokerage firms, payment processors, retirement plans, and other organizations report income and payment information to the IRS on forms such as:
- Form W-2
- Form 1099-NEC
- Form 1099-K
- Form 1099-INT
- Form 1099-DIV
- Form 1099-B
- Form 1099-R
When the IRS computer-matching system identifies a discrepancy, it may issue a CP2000 proposing changes to your return.
A CP2000 is a proposed adjustment. It is not itself a tax bill and is not the same thing as a traditional IRS audit.
How Long Do You Have to Respond?
The IRS generally instructs taxpayers to respond within 30 days from the date of the notice, or generally 60 days if the taxpayer lives outside the United States. Your actual CP2000 contains the response deadline that applies to your case.
What Should You Do?
First, compare the CP2000 carefully with the tax return you filed and the income documents identified by the IRS.
Determine whether:
- The income actually belongs to you.
- The IRS has duplicated an item.
- The income was already reported elsewhere on your return.
- The payer reported an incorrect amount.
- The IRS failed to account for cost basis, deductions, exclusions, or expenses.
- An amended return may be necessary.
- The IRS's proposed tax calculation is correct.
If you agree, follow the instructions provided with the notice.
If you disagree, provide a clear explanation and supporting documentation showing why the proposed adjustment is incorrect.
The IRS may accept your explanation, request additional documentation, or issue a revised proposed adjustment.
What Happens Next?
If the matter is not resolved during the CP2000 process, the IRS may eventually issue a statutory Notice of Deficiency, which can provide the right to petition the United States Tax Court.
That later deadline is extremely important and should not be confused with the initial CP2000 response period.
Common CP2000 Mistakes
- Assuming the IRS calculation must be correct.
- Paying the proposed amount without reviewing how the IRS calculated it.
- Forgetting to account for stock or cryptocurrency cost basis.
- Sending documentation without explaining what it proves.
- Filing an amended return without properly addressing the CP2000.
- Ignoring the notice because the taxpayer believes the original return was correct.
- Waiting until the deadline has passed before seeking professional help.
Key Takeaway
A CP2000 is a proposal, not necessarily the final word. Review the underlying tax return and information documents before agreeing to additional tax.