While the odds of getting audited by the IRS are very slim – only 0.2 percent of individual income tax returns filed for the 2020 tax year faced an audit – receiving an IRS notice in the mail is far more likely. In fact, the federal government sends roughly 170 million letters a year to taxpayers.
The good news is that an IRS notice is not an audit. These letters can be triggered for many reasons, from questions about your return to identify verification or refund adjustments.
For some, spotting an IRS envelope in the mail can spike stress levels faster than a crying baby on a cross-country flight. Others assume an overwhelmed IRS won’t follow up on an automated letter, so they bury it in the “to do” pile and hope it disappears.
“Getting a letter from the IRS can make some taxpayers nervous – but there’s no need to panic,” the IRS says. “The IRS sends notices and letters when it needs to ask a question about a taxpayer's tax return, let them know about a change to their account or request a payment.”
But when it comes to ignoring the IRS notice, no amount of social media advice will make the situation go away. In many cases, delaying can make the problem more expensive and harder to fix over time.
This guide explains what an IRS notice means, why you might have received one, and what can happen if you don’t respond.
An IRS notice is an official letter about your tax account. It may involve (but is not limited to):
Some notices are routine and easy to resolve. Others are time-sensitive and can escalate quickly if you don’t respond.
Even the U.S. Department of the Treasury admits that these notices can often be confusing: “These notices are often long, with extraneous inserts, and difficult for taxpayers to understand. They are filled with complex legal jargon. And they do not clearly and concisely communicate the next steps a taxpayer must take.”
Either way, the key thing to understand is that IRS notices come with response deadlines, and deadlines are where some taxpayers can get burned.
Not every IRS notice means you’re in major trouble. In many cases, it’s triggered by something simple. Here are the most common reasons taxpayers receive IRS mail:
This can happen even if you filed your return on time. Maybe you:
The IRS receives copies of income documents like W-2s and 1099s. If your tax return doesn’t match what the IRS has on file, it may send a notice asking questions or proposing changes.
This is common with:
If the IRS believes you didn’t file a required return, it may send a notice requesting that you file or explain why you don’t need to.
Sometimes the IRS changes your refund amount, delays it, or requests identity verification before issuing it.
Math errors, missing forms, or incomplete information can generate notices too. It might feel like a technicality, but technicalities are kind of the IRS’s native language.
Federal tax law spans tens of thousands of pages, and the Internal Revenue Code alone contains more than 4 million words, according to the National Taxpayer Advocate.
If you ignore an IRS notice, the situation often escalates in stages. Not every taxpayer goes through every step, but the longer you wait, the more likely the IRS is to move from “communication” to “collection.”
Stage 1: The Problem Gets More Expensive
If the notice involves taxes you owe, the IRS may begin adding:
Even if the original balance isn’t huge, it can grow quickly over time.
Stage 2: You Get More IRS Notices
The IRS typically doesn’t jump straight to aggressive enforcement. Most people receive multiple notices first.
As time passes, the letters may include:
Stage 3: The IRS May File a Federal Tax Lien
If the balance remains unresolved, the IRS may file a Notice of Federal Tax Lien, which is a legal claim against your property.
A lien can affect your ability to:
A lien doesn’t always mean the IRS is taking money immediately. But it’s a major escalation, and it can create real-world headaches long before the debt is paid.
Stage 4: The IRS Can Levy Your Bank Account or Garnish Wages
If the IRS continues to be ignored, it may move from “sending mail” to “taking action.” This is where things get serious. A tax levy can include:
The IRS can require your employer to send part of your paycheck to the government. Unlike some creditors, the IRS doesn’t need to win a lawsuit first.
The IRS may freeze funds in your bank account and take money after a short holding period.
Other Asset Seizure
In more severe situations, levy action may extend to other assets depending on the facts of the case.
Before the IRS can levy your wages or bank account, it must send you a 'Final Notice of Intent to Levy and Notice of Your Right to a Hearing' at least 30 days in advance, giving you time to respond or request a hearing.
Stage 5: Your Tax Refund May Be Taken
If you’re owed a future tax refund, the IRS may apply it to your balance automatically. This can happen year after year until the debt is resolved.
Stage 6: You Can Lose Your Chance to Dispute or Appeal
One of the most overlooked consequences of ignoring IRS notices is losing valuable rights.
Depending on the type of notice, ignoring it can mean:
This is why early action matters. You don’t want to be trying to negotiate after the IRS has already shifted into “collection mode.”
If you've received an IRS notice, take these steps:
The earlier you act, the more options you have to reduce penalties, avoid enforcement, and resolve the issue on favorable terms.
If you’ve received an IRS notice and aren’t sure what to do next, contact Powell Tax Law today to discuss your options.