Understanding the most common IRS notices

Getting a letter from the IRS can be nerve-wracking. The official seal on the envelope often triggers immediate questions: "Did I make a mistake? Am I in trouble?" But there's usually no need to worry. Most IRS notices are common and can be handled easily once you know what they mean.

This guide will break down the most frequent IRS notices, explain why you might receive one, and show you how to respond.

Why Does the IRS Send Notices?

The IRS almost always communicates through postal mail, not by phone or email. You might receive a notice if the IRS needs to:

• Clarify information on your tax return.
• Inform you that you have a balance due.
• Confirm changes made to your return.
• Request more documents from you.
• Alert you to a potential error.

Every notice has a unique number in the top right-hand corner (like CP2000 or CP12). This code tells you exactly why the IRS is contacting you.

Five Common IRS Notices and What to Do

Here are five of the most common notices you might receive:

1. CP2000: Proposed Changes to Your Tax Return
This notice means the IRS found a difference between the information you reported and the data they received from third parties (like your employer or bank). For example, if your W-2 shows higher wages than you reported, the IRS will suggest a correction.

• How to respond: Review the notice. If you agree with the changes, you can accept them and pay any tax owed. If you disagree, you have the right to challenge it by providing supporting documents.

2. CP12: Refund Adjustment
You might get this notice if the IRS corrects a math error on your return. This can result in a different refund amount than you expected—either smaller or larger.

• How to respond: If you agree with the correction, you don't need to do anything. If you disagree, you can ask for a reversal by contacting the IRS within 60 days.

3. CP14: Balance Due
This is the most common notice. It simply states that you owe additional tax and will show the total amount, including any penalties and interest.

• How to respond: Don't ignore it. You can pay the balance in full or set up a payment plan. If you think the notice is wrong, contact the IRS.

4. Letter 4883C: Identity Verification
If the IRS suspects your identity has been stolen, it will send this letter to confirm you are who you say you are before processing your return.

• How to respond: Follow the instructions right away. This usually involves calling the IRS or verifying your identity online. Acting quickly will prevent delays with your refund.

5. CP49: Refund Applied to a Debt
You'll receive this notice if your expected refund was used to pay off other debts, such as past-due federal taxes, child support, or student loans.

• How to respond: The notice will explain where your refund went. If you disagree, you’ll need to contact the agency that received the payment, not the IRS.

What to Do When You Get a Notice

Here are six simple steps to follow:

1. Don’t panic. Most notices are routine and easy to resolve.
2. Read it carefully. The notice will explain the issue and tell you what to do next.
3. Check the notice number. This helps you find more details or discuss it with a professional.
4. Verify the information. Compare the notice with your tax return and records.
5. Respond promptly. Many notices have strict deadlines for taking action.
6. Avoid scams. Remember, the IRS will never contact you by email, text, or social media asking for payment. Real notices always arrive by mail.

We're Here to Help

IRS notices can be confusing, but you don't have to handle them alone. At SD Mayer, we can help you understand what the notice means, communicate with the IRS on your behalf, and guide you through the next steps—whether it's gathering documents, filing a correction, or setting up a payment plan.

Feeling overwhelmed by an IRS notice? Contact us today, and let our team bring you peace of mind.