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Sharpe CPA  /  Tips about taxes  /  IRS notices

What a letter from the IRS means, and where the client is.

Every IRS notice sits somewhere on one path: first the IRS decides what is owed, then it collects it. Find the number in the corner, place it on the chart, and you know what has happened, what comes next, and how long you have.

Use at your own risk. This free tool is provided as is, without warranty, and is not accounting, legal or tax advice. All of the work a CPA performs is subject to that person’s or firm’s judgment. Do your own research and verify that the checklist or protocol you are using is valid and up to date. Built from public sources — see the sources and the terms of use.

Reading the letter

Four things to find before anything else.

The number

In the upper or lower right corner: a CP number or a letter number (LTR). It tells you which program sent it and why.

The date

Deadlines run from the date printed on the notice, not the day it arrived. Keep the envelope when a date is close.

The tax and period

The form and the tax period. A client with several years open gets separate notices for each.

The ask

Is it proposing, deciding or billing? “Proposed” is assessment; “notice of deficiency” is the last step before it; “amount due” and “levy” are collection.

Confirm it on the account transcript. Pull it through the Transcript Delivery System or the client’s IRS online account: the transaction codes show whether the tax has been assessed, whether an examination or underreporter case is open, whether a lien has been filed, and what may have suspended the ten-year collection statute. The codes are explained at the bottom of this page.

The flowchart

From the return to the levy.

Tap a notice to jump to its entry below. The line in the middle is the assessment: above it the IRS is still deciding, and the client can still dispute the amount in the Tax Court; below it the tax is owed and the question is how it gets paid.

The IRS assessment and collection processFour routes to an assessment — math error, information mismatch, examination and non-filing — each ending in a notice of deficiency and the tax being assessed; then the collection notices from CP14 to levy, with lien, hearing and resolution options.ASSESSMENT — THE IRS DECIDES WHAT IS OWEDMath or clerical errorIncome doesn’t match (AUR)Examination (audit)No return filedCP11 / CP12Tax or refund changedfor a math errorCP2501Asks about income thatdoesn’t matchLetter 566 / Letter 2205Correspondence or fieldexam openedCP59 and remindersNo return on filefor the year60 days to ask forabatement of a math-errorassessment — IRC 6213(b)CP2000Proposed changes —not a bill; respond by the date30-day letterLetter 525, 915 or 950 withthe report; Appeals availableCP2566IRS prepares a substitutefor returnCP3219ANotice of deficiency(90-day letter)Letter 3219Notice of deficiency(90-day letter)CP3219NNotice of deficiency(90-day letter)90 days to petition the Tax Court (150 if addressed outside the U.S.) — IRC 6213(a)Agree, or let the 90 days pass, and the tax is assessedTAX ASSESSED — IRC 6203The 10-year collection period begins (IRC 6502). Everything below is collection.COLLECTION — THE IRS COLLECTS WHAT IS ASSESSEDCP14 — first billNotice and demand for payment(IRC 6303)CP501 / CP503Reminders of the balance dueCP504 — notice of intent to levyIRC 6331(d); state refundscan be taken nowLT11 / Letter 1058 (CP90)Final notice of intent to levyand right to a hearing — IRC 6330LevyWages, bank accounts, receivables,federal paymentsRevenue officerLetter 1153 — trust fund recoverypenalty (IRC 6672)Notice of Federal Tax Lien filedLetter 3172 — right to ahearing (IRC 6320)CDP hearingForm 12153 within 30 days;equivalent hearing within 1 yearAppeals determinationTax Court petition within30 days — IRC 6330(d)CP508CPassport certification(IRC 7345)RESOLVE AT ANY STAGEPay in fullInstallment agreementForm 9465 or onlineOffer in compromiseForm 656 (TC 480)Currently not collectibleHardship (TC 530)Penalty abatementIRM 20.1.1
Assessment stepDeadline or appeal rightCollection noticeEnforcementResolution

Before assessment

Assessment notices: the IRS is deciding what is owed.

Until the tax is assessed the amount can still be changed — by answering the notice, in Appeals, or in the Tax Court, without paying first. The notice of deficiency is the last stop: miss its 90 days and the only way to court is to pay and sue for a refund.

NoticeWhat it meansThe clock
CP11 / CP12Changes to the return for a math or clerical error — CP11 when it creates a balance due, CP12 when it changes a refund.60 days to ask for abatement; the IRS must then reverse it and use deficiency procedures (IRC 6213(b)).
CP2501Automated Underreporter first contact: income reported by third parties doesn’t match the return.Respond by the date on the notice.
CP2000Automated Underreporter proposed adjustment — tax, penalty and interest the IRS proposes. Not a bill and not an assessment.Respond by the date on the notice, agreeing or explaining.
CP3219ANotice of deficiency following a CP2000 that was not resolved.90 days to petition the Tax Court (150 outside the U.S.).
Letter 566Correspondence examination opened; asks for documents on specific items.Respond by the date; ask for more time if needed.
Letter 2205Field or office examination: the examiner asks to schedule an appointment.Call to schedule; get Form 2848 on file.
Letter 525 / 915 / 95030-day letters sent with the examination report (Form 4549 or 4549-A): agree, or ask for a conference with Appeals.30 days to agree or protest to Appeals.
Letter 3219Notice of deficiency after an examination.90 days to petition the Tax Court (150 outside the U.S.).
CP59No record of the prior year’s return; file it or explain why none is due. Further reminders follow.File or respond by the date.
CP2566Substitute for return: the IRS computed the tax from third-party information.File the return, or accept the calculation, by the date.
CP3219NNotice of deficiency for the substitute-for-return assessment.90 days to petition the Tax Court (150 outside the U.S.).

After assessment

Collection notices: the IRS is collecting what is owed.

Once the tax is assessed the IRS has ten years to collect it (IRC 6502), less any time the statute is suspended — by an offer in compromise, a pending installment request, bankruptcy or a CDP hearing. The notices escalate until the final notice of intent to levy, which carries the right to a Collection Due Process hearing.

NoticeWhat it meansThe clock
CP14First bill: notice and demand for the assessed tax (IRC 6303). Collection starts here.Pay within 21 days (10 business days if $100,000 or more) to stop interest on the amount billed (IRC 6601(e)(3)).
CP501 / CP503First and second reminders of the balance due.Pay or set up a plan now.
CP71 seriesAnnual reminder of a balance still owed.—
CP49An overpayment was applied to a balance owed instead of refunded.—
CP504Notice of intent to levy under IRC 6331(d); the IRS can levy a state tax refund and will move to other property.Act before the final notice.
LT11 / Letter 1058Final notice of intent to levy and notice of the right to a Collection Due Process hearing (IRC 6330). LT11 comes from the Automated Collection System; Letter 1058 usually from a revenue officer.30 days to request a CDP hearing on Form 12153.
CP90Final notice of intent to levy certain assets, including federal payments, and of the right to a CDP hearing.30 days to request a CDP hearing.
Letter 3172A Notice of Federal Tax Lien has been filed; notice of the right to a CDP hearing (IRC 6320).Request a hearing by the date on the letter.
Form 12153Request for a Collection Due Process or equivalent hearing with the Independent Office of Appeals.CDP: 30 days. Equivalent hearing: within 1 year. Tax Court review of a CDP determination: 30 days (IRC 6330(d)).
CP523Intent to terminate an installment agreement in default and levy.Cure the default by the date.
Letter 1153Proposed trust fund recovery penalty against responsible persons for unpaid withheld taxes (IRC 6672).60 days to appeal.
CP508CSeriously delinquent tax debt certified to the State Department, which can deny or revoke a passport (IRC 7345).Resolve the debt; the IRS reverses the certification.
Look up any notice on irs.gov Publication 594 — The IRS Collection Process

The numbering system

How the IRS numbers its notices, and its records.

Notice and letter numbers

  • CP — a “computer paragraph” notice, generated automatically from the account: CP14, CP504, CP2000.
  • LTR, or Letter — a letter, often issued by an employee or a specific program: Letter 566, Letter 1058, Letter 3219.
  • LT — letters from the Automated Collection System: LT11, LT16.
  • A suffix letter marks a version for a particular program or situation: CP3219A after an underreporter case, CP3219N for a non-filer.
  • Form numbers in the letter name what to send back: Form 4549 (exam report), 5564 (waiver with a notice of deficiency), 12153 (CDP hearing), 9465 (installment agreement), 656 (offer in compromise), 433-A and 433-F (collection information).

Master file tax codes (MFT)

A transcript identifies each tax by its MFT code:

30Form 1040
01Form 941
02Form 1120
05Form 1041
06Form 1065
10Form 940
55Civil penalties, including the trust fund recovery penalty

Every document the IRS processes gets a 14-digit document locator number (DLN):

29filing location2tax class11document045Julian day123block45serial6year

The Julian day says when the document was numbered; the last digit is the year. The example is illustrative.

Transaction codes on the account transcript

TCMeaning
150Return filed and tax assessed — its date is the assessment date for the original tax
290Additional tax assessed
291Tax abated
300Additional tax assessed after examination
420 / 421Examination opened / closed
424Examination requested
922Underreporter review of unreported income
570 / 571Account on hold for pending action / hold released
582Notice of Federal Tax Lien filed
480Offer in compromise pending — suspends the collection statute
520Bankruptcy or other litigation — suspends collection
530Currently not collectible
166 / 276 / 196Failure-to-file penalty / failure-to-pay penalty / interest assessed
610 / 670Payment with the return / later payment
806 / 766Withholding credit / other credits
846 / 898Refund issued / refund offset to a non-IRS debt
971Miscellaneous action — the action code next to it says what (for example, a notice issued or an installment agreement)

The IRS’s own reference to these codes is Document 6209, IRS Processing Codes and Information. Notices change: check the notice itself and its page on irs.gov before relying on a deadline here. See also penalty abatement and the IRS manual and Circular 230.