You Received a Letter from the IRS. Here Is What to Do First.

An envelope from the Internal Revenue Service is an unpleasant thing to open, and the instinct is either to deal with it immediately and badly, or to put it in a drawer. Both are expensive. Here is the order of operations that actually helps.

First: confirm it is really the IRS

The IRS initiates contact by mail. It does not open a case with a phone call demanding immediate payment, it does not email or text you about a refund or a debt, and it does not ask for payment in gift cards or cryptocurrency. It does not threaten to send police to your door.

If the first you hear of something is a call or a text, treat it as a scam. If you get a letter and are unsure, do not use a phone number printed in it — look up the IRS number independently, or bring the letter to a CPA.

Second: read the notice number, not the tone

There is a notice or letter number in a corner of the first page — a CP or LTR reference. That code, not the severity of the language, tells you what this is. The distinction matters because most IRS letters are not audits.

• A CP2000 is an automated underreporter notice. A computer matched a third-party form — a 1099, a W-2, a brokerage statement — against your return and found a difference. It is a proposal, not a bill and not an audit, and it is frequently wrong or incomplete.
• A math-error notice adjusts an arithmetic or transcription problem. There is a limited window to request the adjustment be reversed.
• A correspondence examination is an audit conducted entirely by mail, usually about one or two specific items.
• An office or field examination is a genuine audit with an assigned examiner.
• A 30-day letter proposes changes and offers you the right to go to the IRS Independent Office of Appeals.
• A Notice of Deficiency, sometimes called a 90-day letter, is the one that must not sit in a drawer. See below.

Third: find the date, and treat it as real

Every notice carries a response deadline. Most can be extended if you call and ask before they pass. One cannot.

A Notice of Deficiency gives you 90 days — 150 if the notice is addressed to you outside the United States — to petition the United States Tax Court. That period is set by statute. The IRS cannot extend it, no one can waive it for you, and once it expires you lose the right to dispute the amount in Tax Court before paying it. If you are holding one of these, the clock is the most important fact in the envelope.

Fourth: work out whether they are right

This sounds obvious and is routinely skipped. A CP2000 in particular often reflects information the IRS has but context it does not — a security sale reported at gross proceeds with no basis, a 1099 issued to you for income that belongs to your business, a duplicate form. Agreeing to a proposal that is wrong costs you money that you will not get back easily.

Pull the return for that year, pull the documents behind the item in question, and reconcile them before you write anything.

Fifth: answer exactly what was asked

Respond to the specific item, with the specific documents that support it, by the specific date. Send copies, never originals, and keep proof of what you sent and when.

Do not include records that were not requested. An examination has a defined scope, and volunteering unrelated material is one of the reliable ways to widen it.

How long can they look back?

Generally the IRS has three years from the date a return was filed to assess additional tax. That extends to six years where more than 25 percent of gross income was omitted. Where no return was filed, or where there is fraud, there is no time limit at all.

This is also why unfiled years are worth dealing with rather than waiting out — the clock that protects you never starts.

You do not have to do this yourself

A CPA, an enrolled agent or an attorney can represent you before the IRS. You sign a Form 2848 Power of Attorney, and from that point the correspondence and the phone calls run through your representative rather than through you.

That matters for two reasons beyond convenience. The first is that someone who handles these routinely knows which notices are negotiable and which are not. The second is that in an examination, what you say is evidence, and it is easy to volunteer something unhelpful in a conversation you did not prepare for.

You also have rights during the process — to be informed, to challenge the IRS's position, to appeal, and to representation — set out in the Taxpayer Bill of Rights. They are worth reading before you respond.