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IRS notices, audits, and back taxes
Most IRS letters are a computer comparing two documents and finding a gap, so the first job is figuring out which letter you are actually holding.
An IRS envelope raises your pulse. Open it anyway and find the code printed in the upper right corner. That code, not the tone of the letter, tells you what you are actually holding.
Most of what the IRS mails is not an audit. The bulk of it comes out of automated document matching: a computer compares the return you filed against the W-2s, 1099s, and K-1s that other people filed about you, finds a gap, and prints a CP2000 proposing a change. Examinations are a smaller category, and individual ones are usually correspondence audits, meaning a letter asking you to document one or two line items rather than a meeting with anybody.
That does not make a notice harmless. It means the thing in your hand has a defined process, a defined deadline, and a written way out.
What the common notice codes mean
People call every IRS letter an audit notice. They are not the same document, they do not carry the same rights, and the clock on each one runs differently. This is not the full catalog, but it covers most of what lands in a residential mailbox.
- CP2000: a proposed change from document matching. It is a proposal, not a bill, and you can agree, partly agree, or dispute it
- CP14: the first bill. The tax is already assessed and a balance is now due
- CP501, CP503, CP504: escalating reminders on that same balance. CP504 is where the language turns to levy on state refunds
- LT11 or Letter 1058: final notice of intent to levy. It carries a 30-day right to a Collection Due Process hearing on Form 12153, and letting that window close costs you the hearing
- CP3219A or Letter 3219: statutory notice of deficiency. Ninety days to petition the U.S. Tax Court. That one is set by statute and nobody can extend it
- CP59: the IRS has no record of a return it believes you were required to file
The clock started when the letter was printed
Every deadline above runs from the date printed on the notice. Not the date it reached your mailbox, not the date you opened it. A CP2000 typically allows 30 days. Postal transit takes some of that, the envelope sits on the counter for a week, and now you have nineteen days, which is workable if you start and a real problem if you do not.
These dates are load-bearing. Let the 30 days on a CP2000 run out and the proposal ripens into a notice of deficiency. Let the 90 days on the deficiency notice run out and the tax gets assessed, at which point the argument is no longer whether you owe it but how you intend to pay it. Early is cheap. Late is expensive.
If a letter or a caller demands immediate payment by phone, wire, or gift card, it is not the IRS. Real notices arrive on paper, carry a code, and direct payment to a lockbox address or to IRS.gov. Nobody legitimate is waiting on the line for your card number.
Do not assume the notice is right
A CP2000 is generated by a computer that saw a form you did not report on the return. The computer is usually correct about the document and frequently wrong about the tax. The causes repeat, and they are boring: a 1099-B reporting gross proceeds with no cost basis attached, so the entire sale looks like gain; a 1099-NEC issued twice for one job; an IRA rollover coded as a taxable distribution on the 1099-R; income reported under a spouse's Social Security number; a K-1 amended after the return went in.
In several of those the right response is a letter and a corrected schedule, and the proposed balance goes to zero. Signing the response page because the number looks official is how people pay tax they never owed. Check it against your own records first, then answer the specific line the notice proposes to change.
What a power of attorney actually does
Form 2848 is a power of attorney for tax matters. Once you sign one naming me, I can pull your account, wage and income, and return transcripts, call the Practitioner Priority Service, speak with the revenue officer assigned to the case, and respond in writing on your behalf. You get copies of everything. You do not spend a Tuesday morning on hold.
Form 8821 is a different animal. It is an information authorization: it lets someone see your account but not speak for you. If a firm has you sign an 8821 and describes it as representation, it is not. Practice rights before the IRS are federal, so a CPA licensed in one state can represent you regardless of where you live. I work from Charlotte with clients around the country on exactly that basis.
What happens after you send me the notice
Send it over
Upload the letter through the contact form with the code and the printed date visible. I will tell you what it is, what it is actually proposing, and how many days you really have. That first read costs nothing.
Pull the transcripts
You sign a Form 2848 and I request the account and wage-and-income transcripts. Transcripts routinely explain the notice better than the notice does, including what the IRS has posted and when.
Price it before work starts
Complexity gets scored on the same scale every client sees, and you get a flat fee in writing before anything begins. Notice work is priced on what the file requires, not on how worried you sound on the form.
Respond
Usually a written reply with a corrected schedule and the documents behind it, filed ahead of the deadline. Sometimes it is an amended return, an installment agreement, or a penalty abatement request instead.
Confirm it posted
I keep watching the account afterward, because a mailed response and a corrected account are two different things. The file closes when the transcript shows the adjustment.
Unfiled years and back taxes
Some people arrive with three unfiled years. Some arrive with seven. The reason is almost always ordinary and I am not going to lecture you about it. The problem is mechanical, and mechanical problems have known fixes.
Two facts change how people think about it. The assessment statute of limitations does not start until a return is filed, so a filed year generally closes after three while an unfiled year stays open indefinitely. Filing is what starts that clock, even on a year you cannot pay.
The second fact is what the IRS does in your absence. It can prepare a substitute for return under section 6020(b) from the income documents it holds, which gives you the standard deduction and the least favorable filing status and nothing else: no basis against a stock sale, no expenses against a 1099-NEC, no dependents, no credits. That balance is nearly always larger than the truth, and filing a real return is how you replace it.
IRS practice generally treats six years of filed returns as enough to bring someone back into compliance, though a revenue officer working an assigned case can ask for more. Once the returns are in, what remains is a payment problem: an installment agreement, currently-not-collectible status if the financials support it, or an offer in compromise if the facts genuinely support one. Offers are marketed hard by settlement mills and accepted rarely. I will tell you whether you are a candidate before you spend money chasing it.
On penalties: first-time abatement can remove failure-to-file, failure-to-pay, and failure-to-deposit penalties for an otherwise clean history, and reasonable cause can reach further with real documentation. Neither ordinarily reaches the estimated tax penalty, which is waived only in narrow circumstances such as a casualty, a disaster, or newly retiring after 62 or becoming disabled. Interest on the underlying tax keeps running either way.
Where the law degree earns its keep
Most of tax practice is accounting. Notice and collection work is procedure: what a statute of limitations does and when it is suspended, which deadlines are jurisdictional and which are administrative, how appeal rights are preserved instead of waived, how to read a code section and the regulation under it rather than somebody's summary of it. That is what law school trains you to do, and this is the corner of my practice where it matters most.
Two limits, said plainly. I am your CPA, not your attorney, and this is not a legal engagement. If a matter has to be litigated in Tax Court, or if there is any hint of criminal exposure, you want a tax attorney and the privilege that comes with one. Week one is the right time to hear that, not month six, and I am glad to work alongside counsel when it happens.
When you should not hire me for this
A CP14 for a few hundred dollars you know you owe does not need a CPA. Pay it at IRS.gov and the matter is over. A CP2000 proposing a change you read once and immediately recognize as correct, because you forgot a small 1099-INT, can be handled by signing the response and sending payment. If you just need time, an individual installment agreement for a balance under $50,000 can be set up online in about fifteen minutes without paying anyone to do it.
Hire someone when the number is large, when the notice is wrong, when multiple years are involved, when a lien or levy is in play, or when you already responded once and the IRS wrote back anyway. That last one is the most common reason people end up here.
I can't get over how easy it was to work with Hunter. He's great at communicating with me and answered every question I had.
Send me the notice
Use the contact form and tell me the code on the letter and the date printed on it. Those two things are usually enough for me to tell you what it is and how much time you actually have. The first conversation is free and carries no obligation.
If what you want is to stop receiving these letters at all, that is a different service. Return preparation and tax planning are where most of this gets prevented. Pricing works the same way across all of it: complexity scored at intake, a flat fee in writing before work starts.
Other services
Further reading
Questions, answered plainly.
Does a notice mean I am being audited?
Usually not. Most of what the IRS sends is either an automated document matching notice or a bill on a balance already assessed, not an examination, and even examinations of individual returns are typically conducted by mail. The code in the corner of the letter tells you which one you have, and I will read it and tell you plainly.
What if I cannot pay what the notice says?
Respond and file anyway. The failure-to-file penalty runs at 5 percent of the unpaid tax per month up to 25 percent, while the failure-to-pay penalty runs at 0.5 percent per month up to the same cap. Not filing because you cannot pay costs you roughly ten times as much per month as filing and owing. Payment options get worked out afterward.
How far back do I have to go if I have unfiled returns?
IRS practice generally treats six years of filed returns as sufficient to bring a taxpayer into compliance, though a revenue officer on an assigned case can request more. There is no automatic cutoff, because the assessment statute of limitations never begins on a year that was never filed. I look at the transcripts first and set the scope from what is actually posted.
Can you get my penalties removed?
Sometimes. First-time abatement can clear failure-to-file, failure-to-pay, and failure-to-deposit penalties for a taxpayer with an otherwise clean compliance history, and reasonable cause can reach further when there is documentation behind it. It does not apply to the estimated tax penalty, which is abated very rarely, and interest on the underlying tax generally continues either way.
The first conversation is free.
Tell me what's going on and I'll tell you plainly whether you need me.
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