Understanding Common IRS Notices and How to Spot a Scam
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Receiving a letter from the IRS can be unsettling. However, most IRS notices are routine and can be resolved quickly when handled properly. With the rise in tax-related scams, it’s equally important to know how to verify whether a letter is legitimate.
Here’s a simple, straightforward rundown of the most common IRS notices, what they mean, and how to figure out whether a letter is legit or just a scam.
Why You Might Receive an IRS Notice
The IRS sends notices for several reasons:
A mismatch between income reported on your return and third-party forms (such as W-2s or 1099s)
Missing forms or schedules
Questions about credits or deductions claimed
In many cases, the notice is informational and does not mean you are being audited.
Common IRS Notices Explained
There are several reasons why you might get a notice from the IRS. Below are the most common ones. If you do receive a letter, use our guide below to help you fully understand its purpose and what steps you need to take.
1. CP2000 – Income Mismatch Notice
This is the IRS notice people receive most often. It indicates that the IRS thinks you failed to include some income on your tax return that was reported to them. As a result, they suggest you owe extra tax, plus penalties and interest calculated from their figures.
Important: A CP2000 is not a bill. It’s a proposed adjustment and may be incorrect if income was reported differently or if deductions offset it.
What to Do if you Receive a CP2000:
Compare the IRS income amounts to your records.
Locate missing 1099s, W-2s, or brokerage statements.
Determine whether the IRS calculation is correct.
Sign and return the response form if you agree.
If you disagree, provide documentation and an explanation.
2. Math Error Notices
These notices are issued when the IRS believes there’s a calculation error or missing information on your return. Sometimes these are legitimate math mistakes. Other times they result from mismatched credits or incomplete documentation.
What to Do if you Receive a Math Error Notice:
Review the IRS correction.
Confirm whether the adjustment is accurate.
If correct, no action may be required.
If incorrect, contact the IRS or your tax professional promptly — response windows can be limited.
3. Balance Due Notice (CP14)
You’d receive this notice if the IRS believes you owe additional tax, penalties, or interest.
What to Do if you Receive a CP14:
If this assessment is accurate, paying promptly will help minimize extra interest and penalties. However, if you disagree with the notice, it’s important to gather supporting documentation and respond in a timely manner to address the issue effectively.
4. Identity Verification Letter (5071C, 4883C)
The IRS may send a letter asking you to verify your identity before processing your return or issuing a refund. This is often a fraud-prevention measure and not an accusation.
What to Do if you Receive a 5071C or 4883C:
1. Follow the instructions exactly as written.
2. Verify your identity online through the IRS secure portal or by phone.
3. Have your prior-year return available.
Important: Do not ignore these letters. Your refund will not be released until your identity is verified.
5. Audit Notification (Letter 566 or 2205)
Although less common, audit notices request documentation to support specific items on your return. Many audits are correspondence-based and limited in scope.
What to Do if you Receive a Letter 566 or 2205:
Contact your tax professional.
Do not send original documents.
Respond only to the items requested.
Meet all deadlines.
How to Determine if an IRS Letter Is Legitimate
Tax scams are common, so it’s important to know how to spot a legitimate IRS letter. The IRS contacts taxpayers by mail only and never asks for immediate payment via gift cards, wire transfers, or cryptocurrency, nor does it threaten arrest or deportation.
A real IRS letter includes a notice number, reference to the tax year, part of your Social Security number, and clear instructions for how to respond.
Signs of a scam include poor grammar, odd formatting, urgent payment requests, or links asking for personal info. If unsure, don’t click links or share details. Instead, consult your tax advisor or call the IRS using the official number on their website.
What To Do If You Receive a Notice
Again, if you get an IRS notice, don’t ignore it! Review the notice carefully and timely, compare it to your filed return, and gather documents to resolve discrepancies. If you have questions, contact our office; sometimes IRS adjustments are incorrect and can be addressed quickly.
