How long do I have to respond to IRS Letter 5036?

Respond within 30 days of the letter date. Use the deadline printed on your notice and verify how it is calculated. IRS deadlines may run from the notice or mailing date and are not automatically extended because the letter arrived or was opened late.

What should I do if I received IRS Letter 5036?

Review your gross receipts and the Forms 1099-K listed, then send either an amended return or a written explanation within 30 days. If you are unsure, have a tax professional review the letter before you respond to the IRS.

IRS Letter 5036: Possible Underreported Business Income (Form 1099-K)

Letter 5036 says your business may have underreported gross receipts because card and payment network receipts look too high compared to cash and checks. Respond within 30 days.

Numbers covered by this guide

Letter 5036
Ltr 5036

Check the identifier and follow the instructions on your own notice.

Published by the Law Offices of Darrin T. Mish, P.A.Updated October 14, 2026

Notice: Letter 5036 / Ltr 5036
Urgency: Urgent
Deadline: Respond within 30 days of the letter date

Your first move

Review your gross receipts and the Forms 1099-K listed, then send either an amended return or a written explanation within 30 days.

What This Letter Means

Letter 5036, Notification of Possible Income Underreporting, is about your business's gross receipts. The IRS compared your return with the Forms 1099-K it received for your business. Form 1099-K reports payments made by card and through third party payment networks.

The IRS's concern is the mix. A large share of your reported receipts came from card and network payments. Businesses like yours in comparable locations usually report more income from cash, checks, and other non-card sources. So the IRS thinks some non-card income may be missing. The letter lists your reported gross receipts, each Form 1099-K filer, and the amount each one reported.

What to Do

You must respond within 30 days from the date of the letter, whether you think your return was right or not. Not giving a complete, accurate response can lead to further compliance action.

Check the Forms 1099-K. If any form listed is wrong, tell the IRS in writing.
Check your receipts. Make sure you reported sales from every source and every payment type: cards, cash, checks, and online sales.
Think through the questions the letter raises. These include whether you share your card terminal with another person or business, whether sales tax was included in gross receipts and deducted, what share of your sales are online, and anything unique to your business that explains low cash and check sales.

Your Two Choices

If you underreported, file the amended return form identified in the letter to report the additional gross receipts.
If your return was correct, send a written explanation of why your non-card receipts appear unusually low.

Include the letter with your response, along with your phone number and the hours you can be reached. Keep copies and use certified mail.

What Happens Next

The IRS will review your response. It may ask for more information, send a letter saying no further action is needed, or propose an adjustment to your tax. This letter is a compliance contact that can lead to an examination, so take it seriously and get the facts right the first time.

If you received Letter 5036 about your business receipts, call us at (813) 229-7100.

This letter has a clock on it. Don’t run it out alone.

Free consultation with Darrin T. Mish, a Tampa tax attorney licensed since 1993 and admitted to the U.S. Tax Court. Bring the letter.

Call (813) 229-7100

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