Common IRS Notices and When to Call a CPA

Posted on by Traci Crabtree

Receiving one of the common IRS notices can create immediate concern for business owners. In many cases, the issue is procedural. In others, it can signal discrepancies, penalties, or enforcement action. Understanding IRS notices and responding appropriately protects your business and prevents small problems from becoming larger ones.

Common IRS Notices Business Owners Receive

Several common IRS notices appear frequently during filing season and throughout the year.

  • Balance Due Notices (CP14)
    These indicate an outstanding amount owed. The notice outlines tax, penalties, and interest. Verify the balance against your filed return before making payment.
  • Income Mismatch Notices (CP2000)
    These occur when IRS records do not match the income reported on your return. This does not automatically mean you are wrong, but it does require careful review and timely response.
  • Penalty Notices
    Late filing, late payment, or underpayment penalties are common. In some cases, penalty abatement may be available if reasonable cause exists.
  • Examination or Audit Letters
    These request documentation to support items reported on your return. Deadlines are firm, and responses must be complete and organized.
  • CP504 – Intent to Levy
    This notice warns that the IRS intends to pursue levy action if a balance remains unpaid. It may reference seizure of state tax refunds and signals escalation.
  • Letter 1058 or LT11 – Final Notice of Intent to Levy
    This is a critical notice that provides Collection Due Process rights. Strict response deadlines apply.
  • Notice of Federal Tax Lien Filing
    Indicates the IRS has filed a public lien against your business. This can affect credit, financing, and vendor relationships.
  • Employment Tax Notices (CP161, CP220, CP259)
    Common for businesses with payroll. These address unpaid payroll taxes, missing returns, or assessed penalties.

Ignoring IRS notices can result in additional penalties, liens, or enforced collection actions.

When to Call a CPA

You should contact a CPA if:

  • The notice proposes changes to your return
  • You disagree with the IRS position
  • Significant penalties are assessed
  • Deadlines are approaching quickly
  • The issue involves payroll, multi-state activity, or large dollar amounts
  • You do not fully understand what the notice is asking for or how to respond

Some IRS notices are straightforward. Others require technical analysis and strategic communication with the IRS. Responding correctly the first time reduces risk and limits escalation.

Watch for IRS Scams

Filing season also brings fraudulent correspondence designed to resemble common IRS notices. Business owners should be cautious if:

  • You receive threats by phone, text, or email demanding immediate payment
  • Payment is requested via gift cards, wire transfer, or cryptocurrency
  • The message pressures you to act without time to verify

The IRS generally initiates contact through mailed letters. Notice numbers can be verified directly at IRS.gov before responding.

MeredithCPAs helps business owners review notices, evaluate exposure, and prepare accurate responses. Contact MeredithCPAs to address IRS correspondence before it becomes a larger compliance issue.