I Received an IRS Notice. What Should I Do First?

The first thing to do when an IRS notice arrives is read it carefully. That sounds obvious, but many people either panic and call immediately without understanding what the notice says, or set it aside and avoid it entirely. Neither response is helpful.

The IRS sends millions of notices every year. Many are routine — a request for additional information, a notice that a payment was received, a correction to a return that results in a small adjustment. Not every notice means something is seriously wrong.

Step 1: Find the Notice Number

Every IRS notice has a number, typically in the upper right corner of the letter. Common notice numbers include CP2000 (proposed changes based on information returns), CP501/CP503/CP504 (balance due reminders), and Letter 525 (examination of a return). The notice number tells you what type of issue the IRS is raising.

The IRS maintains a searchable database of notice explanations at irs.gov. Looking up the specific notice number gives you a plain-language explanation of what it means and what the IRS is asking for.

Step 2: Understand What the Notice Is Saying

IRS notices generally fall into a few categories:

• Informational: The IRS is notifying you of something — a payment received, a change to your account, a refund issued. No response is required.
• Request for information: The IRS needs documentation to verify something on your return. A response with the requested documents is required by the deadline.
• Proposed change: The IRS believes your return contains an error and is proposing an adjustment. You can agree, disagree, or provide additional information.
• Balance due: The IRS says you owe money. The notice will explain the amount, the reason, and the payment options.
• Audit or examination: The IRS is reviewing your return in more detail. These require a more careful response.

Step 3: Note the Deadline

Most IRS notices include a response deadline. Missing that deadline can limit your options — in some cases, it can result in the IRS treating the proposed change as accepted, or escalating collection activity.

If you need more time to gather records or consult a professional, you can often request an extension of the response deadline. This should be done before the deadline, not after.

Step 4: Gather the Relevant Records

Before responding to any notice, pull together the records related to what the IRS is asking about. This typically includes the tax return for the year in question, any supporting documents (W-2s, 1099s, receipts, bank statements), and any prior correspondence with the IRS about the same issue.

Step 5: Decide Whether to Respond Yourself or Involve a Professional

For simple notices — a request for a document you have, a minor math correction, a balance due that you agree with — responding yourself is often straightforward. The IRS notice will include instructions for how to respond.

For more complex situations — a proposed change you disagree with, an audit, a notice involving a significant amount of money, or a situation where you are not sure what the IRS is actually asking — involving a CPA or tax professional is worth considering. A professional can review the notice, assess whether the IRS's position is correct, and communicate with the IRS on your behalf if needed.

What Not to Do

• Do not ignore the notice — unanswered notices escalate
• Do not call the IRS before reading the notice and understanding what it says
• Do not agree to a proposed change without verifying whether the IRS's position is correct
• Do not miss the response deadline without first requesting an extension