What that notice really means — and what to do about it.

An IRS envelope is never fun to open. But most of the letters we see at HofflerSmith are not the emergency they appear to be. They are procedural notices with deadlines, options, and — almost always — a path forward that keeps you in control.

This is a plain-English guide to the five letters that show up most often in our Cherry Hill office. For each one, we cover what the IRS is actually saying, what your window to respond looks like, and the move that keeps you out of collections.

1. CP14 — Your First Balance-Due Notice

The CP14 is the IRS saying, “We think you owe us money.” It is almost always the first notice a taxpayer receives after a return is filed or a return is created on their behalf. The letter lists a balance, a small amount of interest, and a due date roughly 21 days out.

What it means

The IRS has posted the balance to your account and started the meter on interest and failure-to-pay penalties. If nothing is done, the case moves along the normal collection track: CP501, CP503, CP504, then LT11.

What to do

• Confirm the balance is correct. Math errors and misapplied payments are more common than people realize.
• If you can pay in full, do it before the due date to stop further interest.
• If you cannot pay in full, respond anyway. A short-term plan, installment agreement, or currently-not-collectible review are all on the table at this stage.
• Do not ignore it. The CP14 is the cheapest, easiest stop on this road. Every letter after this one narrows your options.

2. CP2000 — Proposed Changes to Your Return

A CP2000 is not a bill and it is not an audit. It is a proposal. The IRS has matched your return against W-2s, 1099s, K-1s, and brokerage statements they received, and something does not line up. The letter shows their numbers next to yours and a proposed tax change.

What it means

Most CP2000s are triggered by a form the taxpayer didn’t know was issued — a closed brokerage account, a 1099-NEC from a short gig, a 1099-K from a payment app. The IRS assumes the full reported amount is taxable income unless you show otherwise.

What to do

• Read the notice the whole way through. It tells you exactly which form and which line is in dispute.
• Agree, partially agree, or disagree — all three are valid responses. The form walks you through how to mark each.
• Gather the documents that tell the other side of the story: cost basis, offsetting expenses, corrected 1099s, anything the IRS didn’t see.
• Respond inside the 30-day window. If you miss it, the proposal becomes an assessment, and you are now appealing rather than responding.

3. LT11 or Letter 1058 — Final Notice of Intent to Levy

This is the letter people show up at our office with. The envelope is usually certified. The subject line mentions wages, bank accounts, and a 30-day window. It is serious — but it is also still fixable, and the 30-day window is the reason why.

What it means

The IRS has exhausted its early collection notices and is giving you formal notice that, after 30 days, it can begin levying wages and bank accounts and filing federal tax liens. Critically, the same notice grants you the right to request a Collection Due Process (CDP) hearing.

What to do

• File Form 12153 to request a CDP hearing within 30 days of the notice date. This single action freezes collection activity while the hearing is pending.
• Use the pause to put a resolution in place — installment agreement, offer in compromise, or currently-not-collectible status, depending on your situation.
• Do not call the IRS cold without a plan. Anything you say to a Revenue Officer is on the record, and a well-meaning phone call can narrow your options.
• If you are past the 30-day window, you have not lost all rights — but the tools get blunter and the timeline gets tighter. Call us the same day you get the notice.

4. CP504 — Intent to Seize (State Refund and More)

The CP504 is the notice people most often mistake for the “final” notice. It is stern, it mentions seizure, and it arrives just before the real final notice. It also quietly authorizes the IRS to take your state tax refund and begin the process that leads to a federal tax lien.

What it means

This notice is a warning shot. The IRS cannot yet levy your wages or bank account from a CP504 alone — but it can intercept state refunds and is telegraphing that LT11 is coming next if nothing changes.

What to do

• Treat this as your last comfortable off-ramp before the 30-day CDP clock starts. Every tool available at CP14 is still available here.
• If you have ignored prior notices, stop ignoring this one. The gap between CP504 and LT11 is usually short.
• Pull your IRS account transcripts so you know exactly what has posted and what hasn’t. Surprises in collections are almost always documentation surprises.

5. Letter 566, 525, or 915 — You’re Being Audited

Audits begin as letters. Most are correspondence audits — the IRS asks for documentation on a specific item (charitable contributions, business expenses, dependents) and nothing more. A smaller number become office or field audits. The opening letter will tell you which kind you are in.

What it means

The IRS wants to verify one or more positions on a return that is already filed. “Audit” sounds catastrophic; in practice, the scope is usually narrow and the fastest path to closing it is sending exactly what was asked for, organized and labeled.

What to do

• Do not call the auditor before you are represented. Once representation is on file (Form 2848), the IRS talks to us, not you.
• Send documentation that matches what the letter asked for — no more, no less. Expanding the scope is the single most common avoidable mistake.
• Respond by the date on the letter. If you need more time, request it in writing. Auditors grant reasonable extensions when asked properly.
• If the audit is expanding in scope or you disagree with the proposed adjustments, the appeals process is a real option and is often where audits actually get resolved.

What Happens If You Do Nothing

Ignoring IRS mail is the single most expensive decision a taxpayer can make. It is also the most common one. Each notice you miss narrows the menu of options the next notice will offer.

• Interest and failure-to-pay penalties keep compounding — typically adding 8–10% per year to the balance.
• Passports can be flagged as “seriously delinquent” once the balance crosses roughly $64,000 (the threshold is indexed and adjusts annually).
• Federal tax liens attach to your property and appear on title searches, making refinancing, home sales, and some business transactions much harder.
• Wages, bank accounts, and Social Security can be levied. Reversing a levy after it has issued is harder, slower, and more expensive than preventing it.

None of this is inevitable. Each of the letters above has a window — 21 days, 30 days, sometimes 60 — and inside that window the tools are still wide open. Outside of it, they narrow fast.

How HofflerSmith Helps

We are a tax resolution and advisory firm based in Cherry Hill, serving clients across South Jersey and the broader Philadelphia metro. Our lead, Stacey Hoffler-Smith, is an Enrolled Agent — federally licensed to represent taxpayers at every level of the IRS, in all 50 states.

When you bring us an IRS letter, here is what actually happens:

• We file Form 2848 so the IRS speaks with us, not you, for the duration of the matter.
• We pull your IRS account transcripts and reconcile them against the notice. Most cases look different on paper than they look in the envelope.
• We identify the resolution track that fits your situation — not the one that generates the biggest fee. Sometimes that is an installment agreement. Sometimes it is an offer in compromise. Sometimes it is simply a correctly written response letter.
• We handle the correspondence, the calls, and the deadlines. You get updates in plain English, not in IRS-speak.