Got a Letter from the IRS? Find Out What It Means

What it means

The income or payment amounts the IRS received from employers, banks, brokers, or other payers do not match what was reported on your return. The notice proposes a change to your tax. It is not a bill yet, and the proposed amount is not final until you respond or the response date passes.

Why you got it

Automated matching between third-party filings (W-2s, 1099s, 1098s) and your return found a difference. Common causes are a forgotten 1099, a brokerage sale reported without cost basis, or income reported under the wrong name or year.

What to do

1. Read the full notice, including the page that lists each proposed change and the payer it came from.
2. Gather the documents that explain the difference: a corrected 1099, cost basis records, a statement showing the income was already reported, or proof the income is not yours.
3. Respond by the date listed using one of the methods on the notice (the IRS document upload tool, fax, or mail). Do not ignore it because you disagree.
4. If you agree with the notice but also have other income, credits, or expenses to report, file a Form 1040-X with "CP2000" written across the top and send it with the response form instead of just signing and returning the form.

What it means

This is the earlier-stage version of the same underreported-income process as the CP2000. The IRS is telling you that third-party income information does not match your return and is asking you to explain before it proposes a specific tax change. It is not a bill. A CP2501 that is answered well is often resolved before a CP2000 is ever issued.

Why you got it

Automated matching between W-2s, 1099s, and other payer filings and your return found a difference the IRS wants clarified.

What to do

1. Read the entire notice and compare each item to your own records and your copy of the return.
2. If you agree, sign the response form and return it using the method on the notice.
3. If you disagree, send a signed explanation with supporting documents. If the fix requires changing your return, include a Form 1040-X marked "CP2501" at the top.
4. Use the IRS document upload tool if the notice offers it. It is the fastest way to get a response on record.

What it means

The IRS corrected one or more items on your return during processing, and the correction means you now owe money. This is a math error notice, so the change has already been made. You have a short window to ask the IRS to reverse it if you disagree.

Why you got it

A calculation error, a credit claimed without meeting the requirements, or a mismatch between an amount on the return and IRS records was caught during processing.

What to do

1. Compare the changes described in the notice against your own copy of the return.
2. If anything looks wrong, contact us before the date on the notice. The IRS says the fastest way to resolve a processing error is by phone, and supporting documents can be faxed during the call.
3. If you agree, pay in full or set up a payment plan by the due date. Do not mail a copy of the notice back unless it asks you to.
4. Update your personal copy of the return so next year starts from the corrected numbers.

What it means

This is the first notice the IRS sends once a return posts with tax owed that was not fully paid. It is the starting point of the collection notice sequence (CP501, CP503, CP504, and then a final notice) described on this page.

Why you got it

Tax was assessed on your return and the balance was not paid by the due date, or a payment did not post the way it should have.

What to do

1. Check the notice against your return and your payment records. If you already paid, have the confirmation or cancelled check ready.
2. If the balance is right, pay in full by the due date or apply for a payment plan online before the date passes.
3. If the balance looks wrong, contact us right away so we can compare the IRS transcript to what was filed.
4. Keep every notice in the sequence. Each one references the earlier ones.

What it means

A reminder that you still have an unpaid balance on one of your tax accounts. This is the first reminder after the original CP14 bill.

Why you got it

The IRS has not received payment, a payment arrangement, or a response to the earlier balance due notice.

What to do

1. If you have not responded to the original CP14, do it now: pay, set up a payment plan, or call.
2. If you already paid or set up a plan, check that the payment posted. Bring us the confirmation so we can verify it against your account.
3. If you disagree with the balance, call the number on the notice or bring the notice to us before the due date.

What it means

A second, more urgent reminder that the balance is still unpaid and the IRS has not heard from you. The next letter in the sequence is the CP504 notice of intent to levy.

Why you got it

The CP14 and CP501 went unanswered, or a response did not reach the right place.

What to do

1. Treat this as more time-sensitive than the CP501. Pay in full, apply for a payment plan online, or call the number on the notice before the due date.
2. Bring the notice to us if you are unsure the balance is correct or if you cannot pay in full. There are options, but they work better before a levy notice arrives.

What it means

This is your formal Notice of Intent to Levy under Internal Revenue Code section 6331(d). The IRS says it can levy your income and bank accounts and seize property or rights to property, including your state income tax refund, to collect the balance. It can also file a Notice of Federal Tax Lien and, for seriously delinquent debt, certify you to the State Department for passport denial or revocation.

Why you got it

The CP501 and CP503 reminders went unanswered and the balance is still unpaid.

What to do

1. Contact us or the IRS the day this arrives. Do not wait for the next letter.
2. If you can pay in full, do it now. If you cannot, apply for a payment plan or ask us about other options before a levy is issued.
3. If you disagree with the balance, you can request an appeal under the Collection Appeals Program. Bring the notice to us to decide whether that is the right move.

What it means

This is the final notice before the IRS levies. It says the IRS intends to seize your property or rights to property (wages, bank accounts, Social Security benefits, state refunds, vehicles, and other assets) and it tells you that you have the right to a Collection Due Process (CDP) hearing. This is the highest-stakes collection letter on this page.

Why you got it

The earlier collection notices (CP14, CP501, CP503, CP504) went unresolved and no payment or arrangement is in place.

What to do

1. Contact us the day this arrives. Do not set it aside.
2. Decide quickly whether a CDP hearing is worth requesting. If it is, Form 12153 has to be sent within the 30-day window, not just started.
3. Have proof of any payments already made. If you paid and the IRS has not credited it, send proof to the address on the notice.
4. If you cannot pay in full, a payment plan, an Offer in Compromise, or a hardship status can stop the levy. These need to be in motion before the deadline passes.

What it means

The formal legal notice that the IRS has determined you owe additional tax. It is your last opportunity to dispute the amount in the U.S. Tax Court before paying. After the window closes, the tax is assessed and your main path is to pay and then claim a refund (audit reconsideration or an Offer in Compromise based on doubt as to liability may also be options). The automated version of this letter is labeled CP3219A.

Why you got it

An audit, a CP2000 underreporter case, or another examination was not resolved by agreement, or an earlier notice went unanswered.

What to do

1. Contact us immediately. This is the one letter on this page where the calendar truly cannot move.
2. If you agree with the amount, sign and return Form 5564 (the waiver enclosed with the letter) so interest stops growing sooner.
3. If you disagree, the petition goes to the Tax Court, not to the IRS, and it has to be filed within the 90 days. We can help you decide whether to petition, send documents to the IRS, or both.

What it means

The IRS is holding your refund while it verifies your income, withholding, credits, or business income. The IRS says this does not mean you made an error or were dishonest. No response is required unless a follow-up letter (usually a CP05A) asks for documents.

Why you got it

Returns are selected for this review as part of routine verification of income, withholding, and credits.

What to do

1. No action needed yet. Keep the notice.
2. If you did not file the return the notice refers to, complete Form 14039 (Identity Theft Affidavit) and bring it to us. Someone may have filed using your information.
3. If a follow-up letter asks for documents, bring that letter to us right away so the response goes in complete and on time.

What it means

The IRS is auditing the Earned Income Credit, Additional Child Tax Credit, Recovery Rebate Credit (for 2020-2021 returns), or Premium Tax Credit claimed on your return. It is holding the EIC, ACTC, and RRC portions of your refund until the audit is resolved. This is a mail audit, not an in-person one.

Why you got it

Credit claims that involve a qualifying child or filing status are examined often. The IRS states that being selected does not suggest you made an error or were dishonest.

What to do

1. Read the enclosed forms carefully. They list exactly which documents the IRS wants (proof of the child's relationship to you, where the child lived during the year, and the child's age, for example).
2. Gather school, medical, daycare, or landlord records that show the child lived with you for more than half the year. Bring them to us before sending anything.
3. Send copies, never originals, and include the completed response form with everything in one package using the upload tool, fax number, or address on the notice.

What it means

The IRS received a return filed under your Social Security number and needs you to confirm it was really you before it will process the return or release a refund. This is not an audit and does not mean anything was done wrong. If you did not file the return, someone may have used your information.

Why you got it

The return tripped one of the IRS identity theft filters. The IRS uses these letters to stop fraudulent refunds before they go out.

What to do

1. Use the method your letter specifies. A 5071C or 6331C can usually be verified online at irs.gov/verifyreturn. A 4883C is verified by calling the Taxpayer Protection Program number printed on the letter.
2. Have the letter, the return for the year listed, a prior year return if available, and your W-2s and 1099s on hand. The IRS will ask questions about your personal and financial history that only you can answer.
3. This step is yours alone. Even with a signed power of attorney on file, we cannot verify your identity for you. If you want us on the call, the IRS requires you to be on the line too.
4. If you did not file the return the letter describes, tell the IRS that during verification and bring the letter to us so we can help with the next steps.
5. Bring the letter to us if anything about it looks off. Fake identity verification letters and texts are a common scam. The IRS will never ask you to verify through a text message or a link in an email.

What it means

Your return shows a refund, but the bank account information on file is missing, invalid, or was rejected by the bank, or a correction changed what was a balance due into a refund with no account on file. This notice exists because of Executive Order 14247, which moves federal payments toward electronic delivery instead of paper checks by default.

Why you got it

No valid direct deposit account was available when the refund was ready to release.

What to do

1. This has to be done in your own IRS Online Account at irs.gov. There is no way for us, or the phone number on the notice, to enter or correct your bank information for you. The IRS states that its employees cannot update bank account information.
2. Double-check the routing and account numbers before you submit. The IRS allows only one attempt to add an account for this refund.
3. If you would rather not deal with the online account, you do not have to do anything. If there is no response, a paper check goes out after about six weeks.
4. Contact us only if you want help understanding the notice or deciding whether it is worth updating your bank information before the automatic check goes out. We cannot make the update itself.

What it means

The IRS corrected one or more items on your return and the correction changed your refund. You may be getting a larger or smaller refund than you expected, or a refund when you expected to owe.

Why you got it

A calculation or eligibility correction was made during processing, the same kind of fix that triggers a CP11, but in this case it produced a refund.

What to do

1. Compare the corrected figures to your own copy of the return.
2. If you agree, nothing to send. Update your personal copy for your records.
3. If you disagree, contact us or the number on the notice before the date listed. The IRS says phone is the fastest way to resolve these.

What it means

The IRS reviewed the information you sent in response to an earlier notice (often a CP2000) and decided not to change your return. The matter is closed.

Why you got it

Your response to an earlier underreporter or review notice resolved the question.

What to do

1. Keep the notice with your tax records for that year.
2. If you made a payment toward the earlier proposed change, the IRS should refund it. Contact us if it has not arrived within about six weeks.

What it means

All or part of your expected refund was applied to a federal tax debt from another year instead of being paid out to you. Any remaining refund should arrive within about three weeks unless you owe other debts.

Why you got it

The IRS had a balance due on your account from a prior year and applied the current refund to it.

What to do

1. No action required if you recognize the debt.
2. Contact us if the debt it was applied to is unfamiliar or looks wrong. Have your return and any payment records ready.
3. If the debt belonged only to your spouse and you filed jointly, ask us about Form 8379 (Injured Spouse Allocation) to recover your share.