The IRS Sent You a Letter. Here Is What It Actually Means — and What to Do Next.

The IRS sends hundreds of millions of letters every year. Most of them are not the crisis they appear to be. But some of them are. And the ones that are require immediate, strategic action.

The problem is that most people cannot tell the difference — and the IRS does not make it easy. The letters are written in bureaucratic language, they reference code sections that mean nothing to a non-specialist, and they often arrive with deadlines that are not clearly explained.

I am admitted to the U.S. Tax Court and hold professional training from Harvard Business School in financial valuation. I have represented taxpayers in IRS disputes at every level. Here is how to read the most common IRS letters — and what to do when you receive one.

The Most Common IRS Letters

CP2000: Proposed Changes to Your Return

The CP2000 is one of the most common IRS letters. It proposes changes to your tax return based on information the IRS received from third parties — employers, banks, brokerages — that does not match what you reported.

A CP2000 is not an audit. It is a proposed adjustment. You have the right to agree, disagree, or partially agree. If you disagree, you must respond with documentation supporting your position. Do not ignore a CP2000. If you do not respond, the IRS will assess the proposed tax, plus interest and penalties.

CP90 / CP297: Final Notice of Intent to Levy

This is a serious letter. A CP90 or CP297 is the IRS's final notice before it begins collection action — including bank levies, wage garnishments, and seizure of assets. You have 30 days from the date of the letter to request a Collection Due Process (CDP) hearing.

Letter 531 / Notice of Deficiency

A Notice of Deficiency (sometimes called a “90-day letter”) is the IRS's formal determination that you owe additional taxes. You have 90 days from the date of the notice to petition the U.S. Tax Court — without first paying the disputed tax.

This is one of the most important letters the IRS sends. Missing the 90-day deadline means you lose the right to challenge the deficiency in Tax Court without first paying it. I am admitted to the Tax Court and have litigated cases there.

Letter 3172: Notice of Federal Tax Lien

A Notice of Federal Tax Lien means the IRS has filed a lien against your property — including real estate, financial assets, and business assets. A tax lien can affect your ability to sell property, obtain financing, and conduct business.

You have the right to request a Collection Due Process hearing within 30 days of the date of the lien notice. Sean can challenge the lien, negotiate a lien subordination or discharge, or pursue other collection alternatives.

What to Do When You Receive an IRS Letter

• Read it carefully. Note the type of letter, the deadline for response, and the amount at issue.
• Do not ignore it. Every IRS letter has a deadline. Missing the deadline can forfeit important rights or result in automatic assessment of the proposed tax.
• Do not respond without an attorney. Your response to an IRS letter can affect your rights in subsequent proceedings. A poorly drafted response can waive arguments that would otherwise be available.
• Gather your records. Locate the tax return at issue, any supporting documentation, and any prior correspondence with the IRS about the same matter.
• Call an attorney. The sooner you involve an attorney, the more options you have.

Business Tax Disputes Require Specialized Experience

Business tax disputes — payroll tax assessments, employment tax controversies, business income tax audits — are more complex than individual tax disputes. They involve not just the tax law but the business context: how the business is structured, how income is recognized, how employees are classified, and how transactions are documented.

My Harvard Business School training in financial valuation gives me a sophisticated understanding of business economics that most tax attorneys lack. In disputes involving business valuations, transfer pricing, and complex financial transactions, that training is a significant advantage.