Understanding Your Audit Letter
The standard way for the IRS to communicate to taxpayers about audits is through the US mail. There are various types of form letters they send. Below are some of the most common IRS audit notifications you may receive:
"One Issue" IRS Notices
The following are computer-generated notices you will receive if the IRS computer flags what it thinks is a mistake in your tax return:
- CP05, CP07 – Reviewing your tax return to verify income, deductions, credits, etc. Tax return held until review is finished.
- CP05A – Reviewing your tax return and additional documentation is needed to complete the review.
- CP06A – Verification of the Premium Tax Credit and supporting documents needed.
- CP11, CP10, CP12, CP13, CP16, CP18 – A discrepancy in the calculation of taxes and/or Earned Income Tax Credit in your tax filing and IRS made changes to your return.
- CP14 – IRS records show an underpayment of tax IRS may have misapplied or missed tax payments made and have calculated a balance due.
- CP23, CP24, CP25 – Discrepancy in estimated tax payments on your tax return and the amount posted to your IRS account.
- CP75 – Verification needed for Income, Withholdings, Dependents, Earned Income Credit, Additional Child Credit, Premium Tax Credit claimed on your return.
- CP2000 – Discrepancy in income and/or payment information in your tax filing.
- CP2501, CP2531 – Discrepancy in information reported or missing from tax filing
- Letter 5598 - Discrepancy in Premium Tax Credit reconciliation Form 8962
"Full Audit" IRS Notices
The following are notices that you will receive when the IRS has determined that it is going to open up a wider inquiry (full audit) of your tax return(s):
- Letter 2202 – Notice of audit. IRS has scheduled an appointment to examine your tax return.
- Letter 3572 – Notice of audit. IRS requests a call within 10 days to schedule an appointment for exam.
- Letter 3573 – Confirmation of audit appointment scheduled.
- Letter 566 - Notice of audit. IRS will conduct the exam through correspondence.
- Form 4549 - Examination report. IRS has completed an exam of your tax return. This form shows computational changes to your tax return and proposed additional tax due.
Other IRS Notices
- Notice of Audit and Examination Scheduled: This is the standard notice to the taxpayer that they will be audited and the IRS wants to meet with them to discuss their tax return. You generally have to respond within 10 days to schedule an in-person appointment with the IRS.
- IRS Letter 525, General 30 Day Letter: This letter informs you that the IRS has a proposed adjustment to your tax return. It generally includes a worksheet, Form 4549 "proposed Adjustment/Changes to your Tax Return," which is the auditor’s report or findings. The adjustment can be caused by a math error or something else that makes the IRS fairly confident you have made a mistake. If you agree with the proposed change, then you can sign and return the agreement form. If you don’t agree, then you can request an appeal/protest with the IRS office that sent you the letter. Be careful with this notice because many times the information is incorrect.
- IRS Letter 531, Notice of Deficiency (a.k.a. the 90-day Letter): This letter notifies you that you owe additional tax for the tax year (or years) identified in the letter. You can either agree and pay, or if you disagree, file a petition with the tax court within ninety days from the date you received the notice. This is a very important and urgent letter. The IRS does not grant deadline extensions beyond the 90 days.
- IRS Letter 692, Request for Consideration of Additional Findings: This letter accompanies a report that makes detailed adjustments to your tax return. If you agree to the adjustments, then you can sign the agreement and return it to the IRS. If you do not agree, then you can submit a request to appeal/protest with the office that sent you the letter. To request an appeal, you will have to act quickly: within 15 days from the date you received the letter.
- IRS CP 2000 Notice: Automatic Adjustment Notice: This is one of the most common automated adjustment notices. This notice will show proposed changes to your tax return. The IRS compares information provided by third parties about you with the income, payments, credits, and other deductions you reported on your tax return. Be careful with this notice because many times the information is incorrect. If you agree, you can pay the amount owed. If you don’t agree, you can call the IRS or contest it in writing within 60 days, otherwise the IRS will make the adjustment final.
- IRS Letter 915, Letter to Transmit Examination Report This letter notifies you of adjustments in your tax amount. If you agree, then you can sign and return the agreement form. If you don’t agree, you will need to file an appeal/protest within 30 days of receiving the letter. Be careful with this notice because many times the information is incorrect.
- IRS Letter 950, 30 Day Letter Straight Deficiency or Over Assessment This letter is sent after IRS field audits to report unagreed issues, straight deficiencies and/or any straight overassessment. If you agree with the findings, then you can sign and return the agreement form. If you don’t agree, then you will have 30 days to file an appeal/protest. Be careful with this notice because many times the information is incorrect.
- IRS Letter 3391, 30 Day Non-filer Letter: The IRS will send this letter if it believes you have a tax liability due even though you did not file a return, or your return was lost. The letter includes a proposed adjustment to your tax liability. If you agree, then you can sign and return the agreement. If you don’t agree, then you have 30 days to file an appeal/protest. Be careful with this notice because many times the information is incorrect.
It is important not to overlook, ignore or delay acting upon IRS notification letters because your action is typically required and on a tight schedule. Just remember that if you don’t agree with the IRS findings generally you will always have a chance to dispute them. Delayed response makes this much more difficult. It is also typically advised never to sign IRS documents if you do not know to exactly what you are agreeing. If you are unsure of the appropriate actions to take, consider hiring a tax professional to help you.
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