Step One: Open It Immediately
Do not put it in a pile. Do not wait until the weekend. Do not assume it is a duplicate of something you already received. Open it right now. The date on that letter started a clock, and every day you wait is a day closer to a deadline you might not know about yet.
Step Two: Identify the Letter Number
Look at the upper right corner of the first page. Find the notice number (CP followed by digits) or letter number (LTR followed by digits and possibly a letter suffix). Write it down. This is the single most important piece of information on the entire document.
Step Three: Find the Deadline
Scan the letter for any date by which you must respond. Some letters state it explicitly: "You have 30 days from the date of this letter to respond." Others bury it in the body text. Some deadlines are not stated at all but are imposed by law based on the type of letter. If you cannot find a deadline, look up the letter number to determine whether one applies.
Step Four: Read the Entire Letter
Now read every word. Understand what the IRS is telling you. Are they proposing changes to your return? Requesting documents? Notifying you of a balance due? Warning you of enforcement action? Each type requires a different response.
Step Five: Do Not Call the IRS Yet
Your instinct will be to pick up the phone and call the number on the letter. Resist that urge unless you are certain you understand the issue and know exactly what you want to say. Everything you say on that call is noted in your IRS account. Admissions, agreements, and statements made on the phone can be used against you later.
Step Six: Contact a Tax Professional
If the letter involves a balance you cannot pay, an audit, a proposed change to your return, or any enforcement action like a levy or lien, talk to a tax professional before you talk to the IRS. A tax attorney, enrolled agent, or CPA who specializes in IRS representation can review the letter, pull your account transcripts, and advise you on the best course of action.
Step Seven: Calendar the Deadline
Put the response deadline in your calendar with a reminder one week before. If you are working with a representative, make sure they have the same deadline calendared. Missed deadlines are the number one cause of preventable tax disasters.
Step Eight: Make Copies
Photocopy or scan the letter before you do anything else. Keep a copy in your files. If you send a response by mail, send it certified with return receipt. You need proof of what you sent and when you sent it.
The first 24 hours after receiving an IRS letter determine the trajectory of your entire case. Use them wisely.