Does getting an IRS notice mean I'm being audited?

Almost certainly not. The IRS sends over 200 million notices and letters per year. The vast majority are automated — a computer flagged a discrepancy or a balance is due. A formal audit (examination) involves a specific letter (CP2000, Letter 2202, Letter 531) and is a much more involved process. If your notice is a CP501, CP503, or CP504 (balance due), that's a billing notice, not an audit.

What's the difference between a CP notice and an LT notice?

CP notices are generated by automated IRS systems — they're the most common type and usually deal with discrepancies, balance due, or identity issues. LT (Letter) notices tend to come from IRS compliance functions and are more serious — things like audit notifications or lien warnings. Your notice will have a number in the top right corner of the letter. That number is the key.

I disagree with what the IRS says I owe. What do I do?

Respond in writing by the deadline on the notice. Include documentation supporting your position — bank statements, 1099s, receipts, whatever is relevant. Keep a copy of everything you send. The IRS must respond to your written disagreement. If you can't resolve it through correspondence, you have the right to request an Appeals conference. Do not just ignore it because you think they're wrong.

Someone called me saying they're from the IRS and I owe money. Is this real?

Almost certainly a scam. The IRS initiates almost all contact by mail, not by phone. They will never call demanding immediate payment with a gift card, wire transfer, or cryptocurrency. They will never threaten immediate arrest or deportation. If you receive such a call, hang up. Report it to the IRS at reportphishing@irs.gov or the Treasury Inspector General at 1-800-366-4484.

How long do I have to respond to an IRS notice?

It depends on the notice type. Most give you 30 to 60 days from the notice date (not the date you received it — the date printed on the letter). Some, like CP90 or CP297 (intent to levy), require faster action — usually 30 days. Read the deadline on your specific notice and put it in your calendar the day it arrives.

Do I need a CPA or tax attorney to respond to an IRS notice?

Not always. Simple balance-due notices (CP501, CP503) just require payment or a payment arrangement — you can handle that yourself at IRS.gov. Notices about discrepancies (CP2000) often require documentation you can gather yourself. Where you need professional help: if you're disputing a significant amount, if the notice involves a formal audit, if you're facing a lien or levy, or if you don't understand what the IRS is claiming.

IRS notices

I Got an IRS Notice — Here's What to Actually Do

Most IRS notices are not emergencies. Here's what the common ones mean, what requires action, what you can ignore, and the one thing you should never do.

Written by Matt Reese, CPA · 7 min read · Published April 2026·Share on LinkedIn

Key Takeaways

Most IRS notices are automated and do not mean you're being audited. The IRS sends tens of millions of notices every year.
The notice number (CP or LT) tells you exactly what the IRS wants. Look it up before you panic.
Never ignore an IRS notice. Even if you think it's wrong, you need to respond by the deadline.
Many notices are resolved with a simple written response or a phone call. Most don't require a CPA or tax attorney.
The IRS is not coming to your house. Notices arrive by mail. Phone calls claiming to be the IRS are almost always scams.

The first thing to do: read the notice number

Getting mail from the IRS is stressful. The letter sits on the kitchen counter for three days while you avoid it. Here’s the thing: the sooner you open it and find the notice number, the sooner you can relax — because the vast majority of IRS notices are routine and fixable.

In the upper right corner of every IRS notice, there’s a number — something like CP501, CP2000, or LT11. That number tells you exactly what the IRS is communicating. It’s the most important thing on the page.

The IRS notice lookup tool

Go to IRS.gov and search “understanding your IRS notice” — the IRS maintains a searchable database of every notice type with plain-English explanations. Type in your notice number and it tells you exactly what it means and what to do.

The most common notices and what they mean

Here are the notices small business owners encounter most often:

Notice	What it means	What to do	Urgency
CP501	You have a balance due from a previous return	Pay online at IRS.gov/payments, or call to arrange a payment plan	Moderate — pay before it escalates to CP503/CP504
CP503	Second notice: you still have a balance due	Pay or set up a payment plan immediately	High — next step is CP504 (intent to levy)
CP504	Final notice before they levy your assets	Act now — pay or call IRS to prevent levy	Urgent
CP2000	IRS received income information that doesn't match your return	Review the discrepancy — respond agreeing, disagreeing, or providing documentation	Moderate — you have 30–60 days
CP11	IRS changed your return and you owe more	Review the changes — pay if correct, dispute if not	Moderate
CP12	IRS changed your return and you're getting a refund	No action needed unless you disagree with the change	Low
CP14	First notice of balance due (often after filing)	Pay or set up a payment plan	Moderate
CP88	Your refund is being delayed pending review	No action needed unless asked — wait for further notice	Low
LT11 / Letter 1058	Final notice before levy — IRS intends to seize assets	Act immediately — call IRS or contact a tax professional	Urgent
CP01A	IRS issued you an Identity Protection PIN	Use the PIN when filing your next return — keep it safe	Low (informational)

The one thing you should never do

Don’t ignore it. Even if you think the IRS is wrong. Even if you can’t afford to pay. Even if you’re waiting to talk to your CPA.

IRS notices have deadlines. Ignoring them doesn’t make the issue go away — it makes it worse. A balance-due notice that goes unanswered escalates from CP501 to CP503 to CP504 (intent to levy). An ignored CP2000 becomes an assessment you didn’t get a chance to dispute. The IRS has significant collection powers, and they use them — but there’s almost always time to respond if you act promptly.

Note the date on the letter, not the date you received it

IRS deadlines run from the date printed on the notice, not the date it arrived in your mailbox. A notice dated April 1st with a 30-day deadline expires May 1st — even if you didn’t open it until April 20th. Open mail from the IRS immediately. Put the deadline in your calendar the same day.

What most IRS notices are actually about

The IRS sends over 200 million pieces of correspondence per year. The overwhelming majority are generated by automated systems, not by a person reviewing your file. Common triggers:

Income discrepancy.A 1099 or W-2 in the IRS’s system doesn’t match what you reported. This is the most common cause of a CP2000 notice. Often it’s a timing issue, a form that didn’t get included, or a genuine omission. Either way, it’s fixable.
Balance due.You filed a return with a balance owed but didn’t pay it (or underpaid). The IRS sends a series of notices escalating from friendly reminder to more serious collection action.
Math error.The IRS recalculated something on your return and got a different number. This triggers a CP11 or CP12 — you either owe more or they’re sending a refund.
Missing return.The IRS expected a return from you and didn’t receive one. Often happens when an employer filed a W-2 or a bank filed a 1099-INT and no matching return appeared.
Identity verification. Especially post-2020, the IRS sends letters asking you to verify your identity before releasing a refund. Annoying but benign.

How to respond to a CP2000 (the most common complicated notice)

A CP2000 is a “proposed changes” notice — the IRS thinks your return is wrong based on information they received from third parties (employers, banks, clients). Here’s how to handle it:

Compare the IRS’s information to your records.The notice lists the specific income or deduction items they’re questioning. Pull your tax return and the original documents (1099s, W-2s, etc.) and compare them.
Determine if the IRS is right. Sometimes they are — a 1099 that got lost in the mail, income you forgot to include. If so, you can agree with the proposed change, sign the response form, and pay the additional amount.
If you disagree, say so in writing with documentation. Write a clear letter explaining why you disagree. Include copies (never originals) of supporting documents. Mail it to the address on the notice by the deadline, via certified mail with tracking. Keep copies of everything.
If it’s complicated, get help. A CP2000 involving self-employment income, business deductions, or a significant amount is worth reviewing with your CPA. They can often resolve it with a single response letter.

If you can’t pay what you owe

Not being able to pay doesn’t mean you should ignore the notice. The IRS has several options for people who can’t pay in full:

Installment agreement:Pay over time, usually up to 72 months. Set one up at IRS.gov or by calling 1-800-829-1040. There’s a small setup fee and interest continues to accrue, but it stops escalation.
Currently Not Collectible status: If you genuinely cannot pay anything without financial hardship, the IRS can pause collection activity. You have to demonstrate hardship.
Offer in Compromise: A settlement for less than you owe. Much harder to qualify for than the ads suggest, but it exists for people in genuine hardship with little prospect of paying.

The IRS prefers getting something to getting nothing. They would rather you set up a payment plan than disappear.

When to involve a CPA or tax professional

You can handle many notices yourself. But these situations warrant professional help:

You’re facing an LT11 or CP90 (intent to levy or lien) — these require fast action and negotiation
The disputed amount is large enough that getting it wrong matters significantly
The notice involves a formal audit (Letter 2202, Letter 531) rather than an automated discrepancy
You don’t understand what the IRS is claiming, even after reading the notice and the IRS lookup tool
You’re in a payment plan negotiation and want to protect your assets

For everything else — especially balance-due notices where you agree with the amount — the IRS makes it straightforward to respond and pay online without any professional assistance.

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Frequently asked

Questions owners actually ask

Does getting an IRS notice mean I'm being audited?: Almost certainly not. The IRS sends over 200 million notices and letters per year. The vast majority are automated — a computer flagged a discrepancy or a balance is due. A formal audit (examination) involves a specific letter (CP2000, Letter 2202, Letter 531) and is a much more involved process. If your notice is a CP501, CP503, or CP504 (balance due), that's a billing notice, not an audit.
What's the difference between a CP notice and an LT notice?: CP notices are generated by automated IRS systems — they're the most common type and usually deal with discrepancies, balance due, or identity issues. LT (Letter) notices tend to come from IRS compliance functions and are more serious — things like audit notifications or lien warnings. Your notice will have a number in the top right corner of the letter. That number is the key.
I disagree with what the IRS says I owe. What do I do?: Respond in writing by the deadline on the notice. Include documentation supporting your position — bank statements, 1099s, receipts, whatever is relevant. Keep a copy of everything you send. The IRS must respond to your written disagreement. If you can't resolve it through correspondence, you have the right to request an Appeals conference. Do not just ignore it because you think they're wrong.
Someone called me saying they're from the IRS and I owe money. Is this real?: Almost certainly a scam. The IRS initiates almost all contact by mail, not by phone. They will never call demanding immediate payment with a gift card, wire transfer, or cryptocurrency. They will never threaten immediate arrest or deportation. If you receive such a call, hang up. Report it to the IRS at reportphishing@irs.gov or the Treasury Inspector General at 1-800-366-4484.
How long do I have to respond to an IRS notice?: It depends on the notice type. Most give you 30 to 60 days from the notice date (not the date you received it — the date printed on the letter). Some, like CP90 or CP297 (intent to levy), require faster action — usually 30 days. Read the deadline on your specific notice and put it in your calendar the day it arrives.
Do I need a CPA or tax attorney to respond to an IRS notice?: Not always. Simple balance-due notices (CP501, CP503) just require payment or a payment arrangement — you can handle that yourself at IRS.gov. Notices about discrepancies (CP2000) often require documentation you can gather yourself. Where you need professional help: if you're disputing a significant amount, if the notice involves a formal audit, if you're facing a lien or levy, or if you don't understand what the IRS is claiming.

Take the next step

Turn tax questions into a plan. Talk with Matt or see how we work with operating business owners.

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Educational content only.This article is for informational purposes and does not constitute tax, legal, or investment advice. Every owner’s facts are different; consult a qualified CPA and advisor before acting. Tax and accounting services are provided through Matt Reese, CPA; investment advisory services are provided through Measured Risk Portfolios, a registered investment adviser. Matt Reese, CPA and Measured Risk Portfolios are separate entities; clients are not required to engage both.