The Most Common IRS Notices—and How to Respond to Them

Most people who receive IRS notices or letters in the mail experience a sense of fear or panic before they’ve even opened the notice. While it’s true that the notice you receive may sound formal and even harsh, generally speaking you can settle most issues with a calm head and a few simple steps. So, take a deep breath and read through the notice carefully, making a note of the number of the form and the bottom line as to what the IRS wants from you. The IRS tends to be very systematic and generally speaking they make few mistakes, but occasionally people do receive notices in error so it’s essential that you approach the situation with a clear head. Once you have determined if the letter is correct, you can either do your own research and map a plan of action in response or you can contact a knowledgeable tax attorney who can make the situation seem much less frightening. Some examples of some of the more common IRS notices–along with an explanation of why you may have received your notice—are below.

1. CP-11 IRS Notice—If you receive a CP-11 notice from the IRS it means there were changes made to a tax return by the IRS which caused you to owe money. The form should clearly show which changes in your return resulted in taxes being owed and should explain how and why the changes were made. If you made a calculation error, then the notice should indicate “math error.” There will be a three-digit code which is assigned to each change which was made on your return. Your notice should also explain what you need to do if you agree with the changes and what you need to do if you disagree with the changes made to your filed form.
2. CP-88 IRS Notice—This notice from the IRS is to let you know they are holding on to your tax refund rather than sending it to you. Of course this type of notice will cause you dismay, particularly if you were counting on your refund to pay bills. Generally the notice will inform you that you are not entitled to a refund because you neglected to file the proper tax forms in the prior year. You will not be able to receive your refund until you’ve filed all the necessary returns.
3. CP 90/ CP 297/ CP 297A/ LT 11 or L 1058—Any of these notices are very serious and you should take them seriously. If you receive a CP 90 notice this means the IRS is letting you know they intend to take a portion of federal payments which you normally receive. This could be in the form of salary, Social Security benefits or retirement benefits. A CP-90 or CP 297 notice means the IRS intends to levy your properties, bank accounts, vehicle, business assets or wages. Should you ignore these initial notices of intent to levy, you will receive a CP 501 which is your first reminder letter. A CP-503 is your second reminder letter, and a CP 504 is last notice of money owed and at this point in the procedure a Federal Tax Lien may be placed against you if you are unwise enough to ignore this particular notice. If you do ignore a CP 504 then you will receive an LT 11 or L 1058 which is a formal letter sent after you have ignored all prior notices giving you 30 days to make the situation right or risk having your bank accounts levied.
4. CP 523 IRS Notice—This is a notice that you have not paid your installment agreement as promised, for whatever reason. If a CP 523 is sent to you this means the IRS is giving you notice that they intend to revoke your agreement due to your failure to pay.

While receipt of any of these notices can surely ruin your day, there are legal channels to deal with them. If you have further questions you should consult a tax attorney who can more fully explain your rights to you.