IRS Notice Review and Response Services

Steven J. Cashiola, CPA provides virtual IRS notice review, response preparation, transcript analysis, penalty review, and CPA representation when appropriate.

Receiving an IRS notice does not automatically mean that the IRS is correct or that you owe the amount shown. A notice may involve information reported to the IRS by a third party, a payment that was not properly applied, a proposed tax adjustment, a penalty, a missing filing, a refund review, or another account issue.

The appropriate response depends on the specific notice, tax year, return that was filed, IRS account history, supporting records, and applicable tax law. My approach begins by determining what the IRS is asking, whether the notice appears consistent with the return and available records, what documentation may be needed, and what response deadline applies.

Receiving an IRS Notice Does Not Automatically Mean the IRS Is Correct

An IRS notice is the starting point for the analysis, not the conclusion.

Some notices correctly identify a tax or filing problem. Others can involve incomplete information, an IRS matching issue, a payment application problem, an incorrect assumption about an item reported on the return, or documentation that the IRS has not yet considered.

Before paying a proposed amount, filing an amended return, or sending documents to the IRS, it is often useful to compare the notice with the actual return, tax records, payment history, and IRS account information.

The first questions generally are:

1. What notice did the IRS issue and why?
2. Which tax year and tax form are involved?
3. Is the IRS changing tax, penalties, interest, payments, credits, or filing status?
4. Does the IRS information agree with the return and the taxpayer's records?
5. What documents support the reported tax position?
6. What response date appears on the notice?
7. Is a written response, telephone contact, amended return, payment, penalty request, or formal representation appropriate?

What IRS Notice Review Can Include

IRS Notice Analysis

I review the complete notice to determine what the IRS is requesting, what tax period is involved, what adjustment or account action has occurred, and what procedural options are available.

Tax Return and Supporting Document Review

A notice often cannot be evaluated correctly without reviewing the return that generated it. Depending on the issue, I may also review Forms W-2 and 1099, brokerage statements, K-1s, payment confirmations, basis records, business records, prior correspondence, amended returns, and other documentation.

IRS Account and Transcript Review

An IRS account transcript can help determine how a return, payment, penalty, credit, or adjustment was recorded. A wage and income transcript may help identify Forms W-2, 1098, 1099, and other information reported to the IRS. The appropriate transcript depends on the issue involved.

IRS Response Preparation

When a written response is appropriate, I can prepare correspondence explaining the taxpayer's position and organize the documents that support it. The goal is to address the specific issue raised by the notice rather than submitting unnecessary records or a generic explanation.

Penalty and Reasonable Cause Review

If a notice includes a penalty, the analysis should begin by confirming what penalty was assessed and whether the underlying calculation is correct. Depending on the penalty and tax period, administrative relief, reasonable cause, a statutory exception, or another penalty relief provision may be relevant.

CPA Representation When Appropriate

When representation is useful, Form 2848 may authorize me to communicate and act before the IRS for the specified tax matters and periods. The appropriate scope depends on the notice and the engagement.

Common IRS Notices and Issues I Review

CP2000 and Information Matching Notices

The IRS compares information reported on tax returns with Forms W-2, 1098, 1099, and other information received from employers, financial institutions, businesses, and other payers.

A CP2000 identifies a possible discrepancy and proposes changes to the return. It is not itself a bill.

A CP2000 review may involve determining whether the information belongs to the taxpayer, whether income was already reported elsewhere on the return, whether basis or deductible expenses were omitted from the IRS calculation, whether the payer information is wrong, and what documents support the taxpayer's position.

Balance Due Notices

A CP14 or another balance due notice should be compared with the filed return, payments, estimated tax history, credits, prior adjustments, and IRS account activity.

A balance may be correct, but account issues such as an uncredited or incorrectly applied payment can also require investigation. Determining whether the balance is accurate is separate from deciding how an established balance should be paid.

Penalty Notices

Penalty review may involve the type of penalty, tax period, filing and payment history, calculation of the penalty, administrative relief, reasonable cause, statutory exceptions, and supporting documentation.

Penalty relief is not automatic merely because a taxpayer has an explanation. The applicable legal standard and evidence depend on the particular penalty.

Refund Hold and Refund Adjustment Notices

The IRS sometimes holds a refund while reviewing income, withholding, credits, business income, filing history, or other return information. Other notices may reduce or change an expected refund.

The notice should be reviewed to determine whether the IRS is asking for documentation, conducting a review, applying the refund to another balance, changing the return, or taking another account action.

Missing Return and Filing Notices

A notice stating that a return is missing does not always mean that a taxpayer failed to file.

The analysis may include determining whether a filing requirement existed, whether the return was previously filed, whether it was rejected or remains unprocessed, what the IRS account reflects, and what filing or documentation the notice requests.

Proposed Tax Adjustments and Math Error Notices

Some IRS notices make or propose changes to income, deductions, credits, payments, or other return items. Certain math and clerical error adjustments are subject to special statutory procedures.

The notice and return should be compared before assuming that the adjustment is final or that an amended return is required.

How the IRS Notice Review Process Works

Identify the Notice and Response Date

I review the complete notice, tax year, form, stated adjustment, IRS instructions, and response date.

Compare the Notice With the Filed Return

The proposed IRS treatment is compared with what was actually reported and how the item was calculated.

Review Records and IRS Account Information

Depending on the issue, this can include payment records, information returns, brokerage records, business records, prior correspondence, and IRS transcripts.

Determine Whether the IRS Position Appears Correct

The facts are evaluated under the applicable tax law and IRS procedures.

Determine the Appropriate Response

The response may involve agreeing with the notice, disputing some or all of the proposed change, supplying documentation, correcting an account issue, requesting penalty relief, coordinating an amended return, or taking another notice specific action.

Prepare the Response and Provide Representation When Appropriate

When the engagement includes response preparation or representation, I can prepare the written submission and communicate with the IRS within the agreed scope.

Why Responding Before the Notice Deadline Matters

IRS notices do not all use the same response period. The deadline and available procedure depend on the particular notice.

For example, a CP2000 generally requests a response within 30 days, while certain IRS math or clerical error adjustments are subject to a 60 day statutory period for requesting abatement. Other notices use different deadlines and procedures.

Responding by the date shown on the notice can preserve available procedural rights, prevent unnecessary delays, and in some situations reduce additional interest or penalties.

If a deadline has already passed, the notice should still be reviewed. The available options will depend on the particular notice and how far the IRS matter has progressed.

When an Amended Return May Be Part of the Response

Receiving an IRS notice does not automatically mean an amended return should be filed.

For example, the IRS specifically states that when a CP2000 proposal is correct and there are no additional income, credit, deduction, or expense changes to report, the taxpayer generally follows the notice instructions rather than filing an amended return.

If the CP2000 is correct but other items on the return also need to be changed, the IRS instructs taxpayers to submit Form 1040-X with the CP2000 response.

Other notices have different procedures. The notice should therefore be reviewed before deciding whether an amended return is appropriate.

IRS and California FTB Notice Coordination

A federal IRS adjustment can sometimes affect a California return, and a California FTB notice can involve issues similar to those raised by the IRS.

I review California FTB notices involving Notices of Proposed Assessment, balances, penalties, filing issues, federal adjustments affecting California returns, residency and sourcing issues, and related tax return matters.

IRS and California FTB procedures are separate. Each notice should be reviewed for its own response requirements and deadline.

What This Service Is Designed to Cover

This service is focused on IRS and FTB notice review, account and transcript analysis, proposed adjustments, penalty issues, written correspondence, supporting documentation, amended return coordination, and related CPA representation.

It is not marketed as a full service collection practice, Offer in Compromise practice, Tax Court litigation practice, criminal tax defense practice, or ongoing tax controversy practice.

Matters that progress into formal IRS Appeals, Collection Due Process proceedings, litigation, or specialized collection representation are evaluated separately before an engagement is accepted.

IRS Notice Resources and Related Guidance

These resources provide more detailed guidance on common IRS and California FTB notice issues. The appropriate article depends on the notice and the underlying tax issue.

Frequently Asked Questions