Most IRS letters are not audits. They are notices about a math change, a missing form, a balance due or a question about something on the return, and almost all of them come with a deadline. Here is how to handle one calmly, and what your options are if the letter says you owe money you cannot pay at once.
First: confirm it is really from the IRS
The IRS starts contact by mail, never by text message, email or a phone call demanding immediate payment with gift cards or wire transfers. A real notice has a notice or letter number in the top right corner (CP2000, CP14, LTR 12C and so on), your taxpayer ID, the tax year and a response date. Keep the envelope.
Read what it is actually asking
Each notice does one thing: it proposes a change to your return, asks for a missing document, states a balance, or asks you to verify your identity. The notice number tells us which. Compare its numbers with your copy of the return before you agree to anything; the IRS matches third-party forms automatically and is sometimes working from a duplicate or a form that belongs to someone else.
The first week
- Note the response deadline. Most give 30 days; a CP2000 and a Notice of Deficiency have strict dates that cannot be reset.
- Do not pay a proposed amount you do not understand. Paying can be read as agreeing.
- Gather the return, the forms the notice mentions and any proof (statements, 1099s, receipts).
- Respond in writing, by the method the notice names, and keep a copy and proof of mailing. If you agree, say so and pay or set up a plan; if you disagree, explain why and attach the proof.
If you owe and cannot pay in full
The IRS offers several arrangements, and the right one depends on how much you owe and how fast you can pay:
A short-term payment plan gives up to 180 days with no setup fee, for balances under $100,000 including penalties and interest.
A long-term installment agreement spreads the balance over monthly payments, generally up to 72 months. Individuals who owe $50,000 or less (businesses $25,000 or less) can usually apply online and be approved automatically. Interest and the failure-to-pay penalty keep running, but the penalty rate is cut in half while the agreement is in place.
An offer in compromise settles for less than the full amount when the IRS agrees you cannot pay it; it requires full financial disclosure and is approved far less often than advertised.
Currently-not-collectible status pauses collection when paying would leave you unable to cover basic living expenses.
What an accountant can do for you
We read the notice with you, check the IRS’s numbers against your records, draft the written response, prepare any amended or missing return the notice is about, and help you choose and apply for the payment arrangement that fits. Where the IRS requires a signed authorization to speak with us about your account, we prepare that form for you to sign. Formal representation in an audit or appeal is the work of a CPA, enrolled agent or attorney, and we tell you when a case needs one.
Always file the return on time, even if you cannot pay. The penalty for not filing is ten times the penalty for not paying.
Frequently asked questions
What should I do if I receive an IRS notice?
Confirm it came by mail with a notice number, read what it asks, note the deadline, compare the numbers to your return, gather proof and respond in writing before the date. Do not pay an amount you do not understand, and do not ignore it.
Can an accountant help with an IRS payment plan?
Yes. We check how much you really owe, prepare any missing returns the IRS requires before approving a plan, and help you apply for a short-term plan, a long-term installment agreement or another arrangement that fits your situation.
How long do I have to respond to an IRS letter?
Most notices give 30 days from the date on the letter. Some, such as a Notice of Deficiency, have a 90-day deadline that cannot be extended. The date is printed on the notice; respond before it even if you only ask for time.
Will a payment plan stop penalties and interest?
Interest continues until the balance is paid. The failure-to-pay penalty continues too, but at half the usual rate once an installment agreement is in place. Filing on time, even when you cannot pay, avoids the much larger failure-to-file penalty.
General information, not advice for your situation. Rules change; talk to us before acting.
Bring the letter to a free consultation. We will tell you what it means and what to do next before the deadline passes.
Related service: Tax Preparation
By Martha Otalora · Founder & CEO, MO Accounting Services. Last reviewed October 2026.
