Got a Letter from the IRS or the FTB? Start Here
A letter from the IRS or California's Franchise Tax Board can ruin an otherwise good afternoon. Most notices, though, are routine. Many come from automated matching between your return and forms filed by banks, brokers, and employers, and many can be resolved with a clear written response. What matters most is that you respond correctly and on time.
First, make sure it is real
The IRS starts most contacts by regular mail. It does not call to demand immediate payment by gift card, prepaid debit card, or wire transfer, and it does not threaten to have you arrested. It will never ask for your Identity Protection PIN by phone, email, or text.
If a letter or call feels wrong, do not use the phone number or link it gives you. Log in to your account directly at IRS.gov or ftb.ca.gov, or send the notice to us and we will check it.
Read the notice for three things
Every notice tells you three things, usually on the first page:
The notice or letter number, often printed in a top or bottom corner, such as CP2000 or LT11. That number tells you what kind of notice it is.
The tax year and the amount involved.
The response date. This is the most important line on the page.
Do not set a notice aside because you think it is wrong. An unanswered notice often turns into a final bill.
Common IRS notices
CP2000. The IRS is proposing changes because income reported to it, such as a 1099 or a brokerage statement, does not match your return. It is not a bill. You can agree, partly agree, or disagree, and you respond by the date on the notice with an explanation and supporting documents. Common causes include income reported on a different line of the return than the IRS expected, and a stock sale reported to the IRS without its cost basis.
Balance due notices, such as CP14. These are bills for tax, penalties, or interest. If the amount is right and you cannot pay it in full, payment plans are available, and paying what you can now reduces the interest.
LT11 or Letter 1058. This is a final notice of intent to levy. You have 30 days from the date of the letter to request a Collection Due Process hearing on Form 12153. Do not let this one sit.
Identity verification letters. The IRS is holding a return until you confirm you filed it. Follow the instructions exactly, and tell us right away if you did not file the return.
Common FTB notices
The most important FTB notice is the Notice of Proposed Assessment. It proposes additional tax, and you have 60 days from the notice date to protest it, or until the "Protest By" date printed on the notice. After that date, the assessment becomes final and the FTB bills it, including penalties and interest. Protests can be filed online through MyFTB or in writing.
The FTB also sends notices when it believes a return was required but not filed, often based on income it sees reported from other sources. Those deserve a quick response, because the FTB can assess tax based on that income, plus penalties.
How to respond well
Confirm the notice is real, and identify the notice type and the deadline.
Compare it with the return as filed and with your source documents.
Decide whether to agree, partly agree, or dispute it.
Respond in writing before the deadline, include supporting documents, and keep proof of when you sent it.
Follow up until your account shows the issue resolved.
If you want us to speak with the IRS on your behalf, we will need a signed Form 2848, Power of Attorney and Declaration of Representative. The FTB has its own power of attorney forms.
Protect yourself before the next notice
An Identity Protection PIN is a six-digit number the IRS issues to you each year. It keeps someone else from filing a tax return using your Social Security number. Anyone with a Social Security number or ITIN who can verify their identity can sign up, and the fastest way is through your IRS online account. A new PIN is issued every year, so give us your current one when we prepare your return.
Send it to us early
If you receive a notice, send our team a copy as soon as it arrives, along with the envelope, since the mailing date can matter. If you want to talk it through, book a time at calendly.com/kirkcole/15-minute-meeting.
This article is general information, not tax advice for your situation. Tax rules change, and the right move depends on your facts.