The IRS Sent Me a Letter — Now What?
You open the mailbox and there it is — an envelope with the IRS return address. Your stomach drops. Your mind races. Most IRS letters are not the catastrophe they feel like in that moment. But do not panic, and do not ignore it.
Every IRS notice has a deadline. Some give you 30 days. Some give you 10. One of them — the CP90 — can trigger a levy on your bank account if you miss the response window. Knowing which letter you have, and what it means, is the difference between a manageable situation and a financial emergency.
I am Jeffrey Elam, an Enrolled Agent and the founder of JefScot Tax in Charlotte. I help individuals and small business owners resolve IRS issues every day. Here is what you need to know.
Not All IRS Letters Are Created Equal
The IRS sends hundreds of millions of notices every year. Most are routine. A few are serious. The key is knowing which category your letter falls into. Here are the notices I see most often — and what they actually mean.
Proposed Changes to Your Return
The IRS received third-party information that doesn’t match your return — from an employer, bank, or 1099 issuer. This is not a bill and not a final determination. It is a proposal. You have the right to respond and provide documentation. Sometimes the IRS is right. Sometimes they are not — especially if a 1099 was issued in error.
Balance Due Escalation Sequence
These three notices arrive in sequence when you have an outstanding balance and have not responded or paid. CP501 is the first reminder. CP503 escalates the language. CP504 is a notice of intent to levy — the IRS is preparing to take action. If you have a CP504, do not wait.
Final Notice of Intent to Levy
30 DAYS
This is the one that requires immediate attention. The CP90 formally notifies you the IRS intends to levy your wages, bank accounts, or other assets. Within the 30-day window you have rights: request a Collection Due Process (CDP) hearing, pursue installment agreements, or other resolution options. Once that window closes, those rights are significantly reduced. If you have a CP90 right now, call a professional today.
Final Notice Before Levy Action
30 DAYS
Similar to the CP90, the LT11 is a final warning before the IRS moves to levy. It also triggers your CDP hearing rights and carries the same 30-day response window. Do not treat this as junk mail.
What the IRS Is Actually Allowed to Do
Most people are surprised by how broad IRS enforcement authority actually is. When the IRS moves into collections, they can:
- Levy your bank account — drain it in a single action, without further warning
- Garnish your wages — up to a significant portion of each paycheck
- File a Federal Tax Lien — attaches to your property and damages your credit
- Seize and sell assets in serious cases, including real estate and vehicles
- Offset your federal and state refunds indefinitely until the balance is satisfied
They would rather set up a payment arrangement than deal with the logistics of a levy. But they will enforce if ignored. The single most dangerous move is not responding.
What to Do in the First 48 Hours
When you receive an IRS notice, this sequence protects you:
1 — Read it carefully
Identify the notice type (upper right corner of the letter), the tax year in question, and the response deadline. Write that date down immediately. The deadline is real.
2 — Do not call the IRS unprepared
If you call without knowing your rights, your account history, or what resolution options are available to you, the conversation rarely goes in your favor.
3 — Pull your transcripts
Your IRS account transcripts show exactly what the IRS sees: your filed returns, assessed balances, payment history, and any pending actions. What you owe and what the IRS says you owe are not always the same number. A professional can pull these within minutes.
4 — Do not assume the notice is correct
1099s get issued in error. Payments get misapplied. The IRS makes mistakes. A professional can identify discrepancies you would likely miss on your own.
5 — Note certified mail tracking numbers
If the IRS later claims they sent you a notice and you claim you never received it, the certified mail tracking record matters in a hearing.
When to Handle It Yourself — and When to Call an EA
Not every IRS notice requires professional help. Here is an honest breakdown:
You may handle it yourself if:
- The notice is about a minor math error and the amount is small
- You have documentation that directly addresses the discrepancy
- The notice is informational with no balance due or action required
Call a professional if:
- You have a CP90 or LT11 — your levy rights window is closing
- You have unfiled returns from prior years
- You owe more than you can pay in a lump sum
- You are being audited
- You have received multiple notices without responding
- You are a small business owner with payroll tax issues (941 debt)
The Enrolled Agent Advantage
An Enrolled Agent (EA) is a federally licensed tax professional authorized by the U.S. Department of the Treasury to represent taxpayers before the IRS — at every level, in every state, without restriction. CPAs and attorneys may be limited by their state license. EAs are not.
When you sign a Power of Attorney (Form 2848), I make the calls. I respond to the notices. I attend the hearings. My job is to stand between you and a system that can feel overwhelming — and negotiate the best possible outcome. Anyone can prepare your tax return. Only an Enrolled Agent can defend it.
Got a Letter? Let’s Talk.
The worst move is waiting. A free consultation with JefScot Tax takes 20 minutes and gives you a clear picture of where you stand and what your options are.
This article is for general informational purposes only and does not constitute legal or tax advice. Tax situations vary. Consult a qualified tax professional regarding your specific circumstances. © 2026 JefScot Tax. All rights reserved.
Recent Comments