IRS notices 101

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While it’s not a pleasant thought, any taxpayer is open to receiving a letter from the IRS. As such, it’s good to understand the different types of notices and what they mean. While not exhaustive, we offer the following list of the most common:

CP2000: Notice of proposed adjustment

This notice is generated when there is a difference between what the taxpayer reported on the tax return versus what was reported to the IRS by an employer, a bank or other payer. It’s important to note that a CP2000 can result in a refund. The letter informs the taxpayer of the adjustment being made on their return and will break down what was originally reported and the proposed IRS adjustments.

CP2501: Tax return discrepancy

The CP2501 requests clarification regarding information on the tax return that does not match information on file with the IRS. The taxpayer should contact the IRS immediately to explain the difference and correct the return. The deadline is usually 30 days from the date on the notice.

Letter 525: Examination report

This letter informs the taxpayer that changes have been proposed due to an IRS examination. After a taxpayer has been selected for an audit, the IRS may propose additional tax based on the examination. The taxpayer has a 30-day period to dispute this proposed change.

Letter 3219: Notice of deficiency

This letter is sent when it’s determined that a taxpayer has underpaid and owes taxes. The letter indicates the amount due. If the taxpayer agrees, they will sign Form 5564 (Notice of Deficiency Waiver) and send full payment to the IRS. If the taxpayer disagrees, they have 90 days to petition the determination to the Tax Court.

Letter 3391: 30-day non-filer letter

This letter is sent if the IRS determines that tax returns are missing for certain years. Included in the letter will be a computation of the proposed amount due for tax years missing a federal return. Taxpayers have 30 days to appeal this notice or sign and return the agreement to the IRS.

While this is not an exhaustive list, it offers a good start to help you understand the different types of notices and letters you can receive from the IRS.

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