Letter 950 Notice: What It Means and How to Respond

Last updated 10/30/2024 by

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Summary:

The IRS Letter 950 is issued to taxpayers when there is a dispute or issue related to their tax filing that needs to be addressed. This letter typically involves adjustments to tax liabilities and provides the taxpayer with information on how to respond, whether through agreeing to the changes or appealing the decision. Ignoring this letter can result in further actions from the IRS, including penalties, interest, or even enforcement actions. This article will guide you through understanding the purpose of Letter 950, how it affects you, and the steps to take to resolve it efficiently.

Receiving an IRS letter can be alarming, especially when it concerns adjustments to your taxes or potential penalties. One such letter is IRS Letter 950, a notice sent when the IRS proposes changes to your tax return or believes you owe additional taxes. If you receive this letter, it’s crucial to act quickly and correctly to avoid further complications, including fines or penalties. In this article, we’ll dive into the details of Letter 950, explain how it affects you, and offer actionable steps to resolve the issue promptly.

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What is IRS Letter 950?

IRS Letter 950, also known as a “30-day letter,” is a notice sent to taxpayers when the IRS believes changes are necessary to their tax returns. This can occur for various reasons, such as discrepancies found during an audit, unreported income, or errors in your filing. The letter outlines the proposed changes and explains how they affect your tax liability. It also gives you the opportunity to agree with the adjustments or appeal the decision within 30 days.
This letter acts as an initial step in resolving tax disputes before further legal or enforcement action is taken. If the taxpayer disagrees with the proposed changes, they can file an appeal within the 30-day window, hence the name “30-day letter.”

How IRS Letter 950 affects you

Receiving IRS Letter 950 can have several impacts, depending on the nature of the adjustments proposed. If you agree with the IRS’s changes, you will need to pay any additional taxes owed or correct your tax return as instructed. However, if you disagree with the changes, the letter provides you the option to contest the decision through an appeal.
Failure to respond within the allotted time can result in additional penalties, interest, and even enforcement actions. This makes it essential to understand the letter’s contents and respond accordingly, either by accepting the IRS’s adjustments or by filing an appeal to dispute the findings.

In some cases, the letter may be triggered by an error or incomplete information in your tax return, which can be resolved by providing the necessary documentation or clarification to the IRS.

Pro tip

If you disagree with the IRS’s findings, submitting a detailed written response with all supporting documentation can strengthen your appeal. Be as specific as possible to address each point raised by the IRS.

What should you do when you receive IRS Letter 950?

If you receive Letter 950 from the IRS, you must act promptly. Here’s a step-by-step guide to addressing the letter:

Read the letter thoroughly: Carefully review the proposed adjustments and the reasons the IRS believes changes are needed. This will give you a clear understanding of the issues at hand.
Verify your tax return: Cross-check the information on your tax return with the IRS’s findings to ensure there are no discrepancies. If you find errors, determine if they were on your part or due to IRS miscalculations.
Gather supporting documents: If you believe the IRS’s adjustments are incorrect, gather all necessary documents that support your original tax return. This may include bank statements, receipts, or any other proof of your financial activities during the tax year.
Decide your course of action: You have two options when responding to Letter 950:
- Agree: If you agree with the IRS’s proposed changes, follow the instructions to amend your tax return or pay any additional taxes owed.
- Disagree: If you disagree, you can file an appeal using IRS Form 12203 (Request for Appeals Review) or write a detailed explanation of why you contest the IRS’s findings.
Respond within 30 days: The letter gives you 30 days to respond. Whether you agree or disagree, it’s critical to meet this deadline to avoid further penalties or enforcement actions.

How to respond to IRS Letter 950

Steps to take when responding to IRS Letter 950

Once you receive IRS Letter 950, your response will depend on whether you agree or disagree with the proposed changes. Here’s a detailed breakdown of each step:
Agree with the proposed changes:
If you agree with the IRS’s adjustments, you will need to sign the letter and return it. In addition, you may need to pay the amount owed if the changes result in a higher tax liability. The IRS may offer payment options if you are unable to pay the entire amount at once.

Disagree with the proposed changes:
If you believe the IRS made an error or the adjustments are incorrect, you can appeal the decision. File Form 12203 or provide a written statement outlining the reasons for your disagreement. Attach all relevant documents that support your case.

Consider professional assistance:
If the adjustments are complex, or you’re unsure how to proceed, consider consulting a tax professional. They can guide you through the appeals process, ensure you meet all deadlines, and help you gather the necessary documentation.

Pro tip

Keep copies of all documents submitted to the IRS for your records. This includes your original Letter 950, any appeals forms, and supporting documents, which may be helpful if further issues arise.

Other ways to handle IRS Letter 950

In addition to following the letter’s instructions, there are other steps you can take to protect your financial interests and resolve the issue quickly:

Contact the IRS directly:
If you need clarification on any part of the letter, you can contact the IRS by phone. Speaking with an agent may help expedite the resolution process, especially if your case involves a simple mistake.

Consult the IRS’s online resources:
The IRS offers extensive resources on its website that can help you understand the letter and how to respond. You may also be able to resolve minor issues using the IRS’s online tools.

Work with a tax advocate:
If you’re facing financial hardship or believe the IRS is treating your case unfairly, you can seek assistance from the Taxpayer Advocate Service (TAS). This independent organization helps taxpayers resolve issues with the IRS free of charge.

What happens if you ignore IRS Letter 950?

Ignoring IRS Letter 950 can lead to serious consequences, including:

Interest and penalties: The IRS will charge interest on any unpaid taxes and may add penalties to your account for failure to respond or comply with the proposed changes.
Enforcement actions: If the issue remains unresolved, the IRS may take enforcement actions, such as garnishing wages, placing liens on your property, or levying bank accounts.
Difficulty with future tax filings: Unresolved issues with the IRS can complicate future tax filings and result in delays in processing returns or issuing refunds.

Responding promptly can help you avoid these outcomes and ensure that the issue is resolved efficiently.

Pro tip

Consider consulting a tax professional if the proposed adjustments are complex or involve large sums. Professional guidance can help ensure you take the right steps and meet all IRS requirements.

What potential outcomes are possible?

Once you respond to IRS Letter 950, the following outcomes are possible:

Adjustment to your tax return: If you agree with the changes or the IRS finds your appeal lacking in evidence, they will adjust your tax return accordingly. This could mean paying additional taxes or receiving a refund if applicable.
Successful appeal: If your appeal is successful, the IRS will correct their records, and no further action will be required on your part.
Additional information requested: In some cases, the IRS may ask for further documentation to clarify certain issues before making a final decision.

In all scenarios, timely communication with the IRS can help minimize delays and prevent further complications.

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Frequently asked questions

Can I request an extension to the 30-day deadline for IRS Letter 950?

Yes, in some cases, you can request an extension to the 30-day deadline for responding to IRS Letter 950. If you need more time to gather documents or consult a tax professional, contact the IRS immediately to explain your situation and request an extension. Keep in mind that approval is not guaranteed, and it’s best to request an extension as early as possible.

What happens if my appeal is denied?

If your appeal is denied, the IRS will proceed with the proposed adjustments to your tax return. This may result in additional taxes owed, penalties, or interest. If you disagree with the outcome of the appeal, you may still have the option to take your case to the United States Tax Court. Consult a tax professional to understand your rights and the best course of action if your appeal is unsuccessful.

How does IRS Letter 950 differ from other IRS notices?

IRS Letter 950 is specifically a “30-day letter” that proposes changes to your tax return after an audit or review. It gives you the opportunity to agree with the changes or file an appeal within 30 days. Other IRS notices, such as CP2000, may inform you of unreported income, and CP01H may involve identity verification. Each letter serves a different purpose, and it’s important to read the content carefully to understand what action is required.

Will I incur additional fees if I agree with the IRS’s changes?

If you agree with the IRS’s changes outlined in Letter 950 and owe additional taxes, interest and penalties may apply to the amount due. The IRS calculates interest based on the time the taxes were originally due. Paying the balance as soon as possible can help reduce the amount of interest accrued.

Can I respond to IRS Letter 950 online?

Currently, responses to IRS Letter 950 typically need to be submitted by mail or fax, as directed in the letter. Although the IRS offers some online services, responding to a 30-day letter requires following the specific instructions provided in the notice. Always check the latest guidelines on the IRS website or call their support hotline for updated information.

Need help understanding other IRS letters and notices? Visit our comprehensive guide to IRS Letters and Notices or search for the document you received in the table below.

IRS Letter or Notice Number

Notice Description

CP01	The IRS verified your claim of identity theft and will monitor your account.
CP01H	The IRS received a tax return with a social security number that belongs to a dead person.
CP02H	Money is due on an amended return based on a grant received due to Hurricane Katrina, Rita, or Wilma.
CP03C	You received the First-Time Homebuyer Credit for a house you purchased.
CP04	You may be eligible for tax deferment because either you or a spouse served in a combat zone, a qualified contingency operation, or a hazardous duty station during the tax year specified on your notice.
CP08	You may be entitled to additional money due to the Additional Child Tax Credit.
CP10	Your tax return changed due to a miscalculation, and the refund you wanted to apply to an estimated tax payment has changed.
CP10A	Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment has changed.
CP11	You owe money because the IRS amended your return due to a miscalculation.
CP11A	Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment also changed.
CP11M	Your tax return changed due to a miscalculation of the Making Work Pay and Government Retiree Credit, and the refund you wanted to apply to an estimated tax payment has changed.
CP12	You are due a bigger refund because the IRS corrected one or more mistakes on your tax return.
CP12A	The IRS made changes to correct the Earned Income Credit (EIC) claimed on your tax return.
CP12E or CP12F	The IRS corrected a miscalculation on your return.
CP12M	The IRS made changes to the computation of the Making Work Pay and/or Government Retiree Credits on your return.
CP12R	The IRS made changes to the computation of the Rebate Recovery Credit on your return.
CP13	The IRS made changes to your return due to a miscalculation. There is no refund or amount due. Your balance is zero.
CP13A	The IRS made changes to your return due to a miscalculation of the Earned Income Credit. There is no refund or amount due. Your balance is zero.
CP13M	The IRS made changes to your return due to a miscalculation of the Making Work Pay credit or the Government Retiree Credit. There is no refund or amount due. Your balance is zero.
CP13R	The IRS made changes to your return due to a miscalculation of the Recovery Rebate Credit. There is no refund or amount due. Your balance is zero.
CP14	You owe money on unpaid taxes.
CP16	The IRS made changes to your return due to a miscalculation. The refund you were due was applied to other tax debts.
CP21A	You owe money due to the changes you requested that the IRS make on your tax returns.
CP21B	You are due a refund due to the changes you requested that the IRS make on your tax returns. The money should arrive within 2 to 3 weeks.
CP21C	The IRS made the requested changes to your tax return. You will not receive a refund, and there is no tax due. Your balance is zero.
CP21E	As a result of your recent audit, the IRS made changes to your tax return, and you owe money as a result of those changes.
CP21I	The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes.
CP22A	The IRS made the changes you requested, and you owe money as a result.
CP22E	As a result of your recent audit, the IRS changed your tax return, and you now owe money.
CP22I	The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes.
CP23	The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You owe taxes due to these changes.
CP24	The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes.
CP24E	The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes.
CP25	The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You are not due a refund, nor do you owe any money. Your balance is zero.
CP31	You need to update your address because your refund check was returned to the IRS.
CP45	The IRS was unable to apply your overpayment to your estimated tax as you requested.
CP49	The IRS used all or part of your refund to pay a tax debt.
CP53	Your refund check will be sent by mail because the IRS can’t provide your refund through direct deposit.
CP57	The bank declined your payment, so the IRS was unable to draft funds from your bank account.
CP71	A reminder of the amount you owe in tax, penalty, and interest.
CP71A	A reminder of the amount you owe in tax, penalty, and interest.
CP71C	A reminder of the amount you owe in tax, penalty, and interest.
CP71D	A reminder of the amount you owe in tax, penalty, and interest.
CP88	The IRS is holding your refund because you haven't filed one or more tax returns, and it believes you will owe tax.
CP90	The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy in a Collection Due Process hearing.
CP91	The IRS will levy up to 15% of your social security benefits for unpaid taxes.
CP120	The IRS needs documentation of your tax-exempt status.
CP120A	Your organization’s tax-exempt status has been revoked because it failed to file a Form 990 series return for three consecutive years.
CP130	You may no longer need to pay the Alternative Minimum Tax (AMT) because your tax return filing requirements changed.
CP152	The IRS received your return.
CP153	The IRS will send your refund by mail because your direct deposit did not go through.
CP161	You have an unpaid balance due to the IRS.
CP166	Your monthly payment to the IRS did not go through due to insufficient funds in your bank account.
CP178	You may no longer owe excise tax because your tax return filing requirements changed.
CP231	You need to update your address because your refund was returned to the IRS.
CP259	You did not file the business tax return identified in the notice.
CP259A	You should have filed these forms but did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax, or Form 990-N (e-Postcard).
CP259B	The IRS requires you to file these forms but did not – Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation.
CP259C	The IRS believes that you are a private foundation, but did not file the required Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation.
CP259D	You must file this form, but you did not – Form 990-T, Exempt Organization Business Income Tax Return.
CP259E	You should have filed this form, but you did not – Form 990-N (e-Postcard) or Form 990/990-EZ, Return of Organization Exempt From Income Tax.
CP259F	The IRS requires you to file this form but did not – Form 5227, Split-Interest Trust Information Return.
CP259G	The IRS requires you to file this form, but you didn’t – Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations.
CP259H	As a tax-exempt political organization, you must file this form, but you did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax.
CP276A	You submitted your tax liability schedule incorrectly. The IRS typically charges a Federal Tax Deposit (FTD) penalty for this but did not this time.
CP276B	The IRS did not receive the correct amount of tax deposits. It normally charges a Federal Tax Deposit (FTD) penalty but did not this time.
CP297	The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing.
CP297A	The IRS has levied your assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing.
CP298	The IRS notifying you of its intent to levy up to 15% of your social security benefits for unpaid taxes.
CP501	You have a balance due on one of your tax accounts.
CP503	You have an unpaid balance on one of your accounts, and the IRS has not heard from you.
CP504	You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy your state income tax refund to apply it to the amount you owe.
CP504B	You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy certain property or rights to property to apply it to the amount you owe.
CP521	A reminder that you have an installment agreement payment due.
CP523	You have defaulted on your payment agreement. Therefore the IRS is terminating the agreement and will levy your assets.
CP601	Usted tiene un saldo pendiente de pago (dinero que le debe al IRS) en una de sus cuentas contributivas.
CP603	No hemos recibido respuesta de parte de usted y todavía tiene un saldo sin pagar en una de sus cuentas contributivas.
CP604	Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará cualquier reembolso de impuestos estatales al que tenga derecho y aplicarlo al pago de su deuda.
CP604B	Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará ciertas propiedades o derechos de propiedad y lo aplicará al pago de su deuda.
CP621	Este aviso es para notificarle que usted tiene un plan de pagos a plazos vencido. Por favor, envíe el pago inmediatamente.
CP623	Este aviso es para informarle nuestra intención de cancelar su plan de pagos a plazos y confiscar (embargar) sus bienes. Usted incumplió en su acuerdo.
CP711	Nosotros realizamos cambios a su planilla debido a que entendemos que hubo un cálculo erróneo. Como resultado de estos cambios, usted adeuda dinero por sus contribuciones.
CP721	Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos.
CP722	Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos.
CP771	Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP772	Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP773	Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP774	Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP959	Usted no radicó su planilla de contribución de negocios identificada en este aviso.
CP2000	The income or payment information on file doesn’t match your tax return. The discrepancy may result in an increase or decrease in your tax due.
CP3219A	The IRS has received information that is different from what you reported on your tax return. This may result in an increase or decrease in your tax.
CP3219N	The IRS didn’t receive your tax return, so it calculated your return based on the information received from employers, financial institutions, and others. If you want to challenge the proposed tax, you have 90 days from the date of this notice. If you are outside the country, you have 150 days.
Letter 0012C	The IRS needs additional information to process your tax return.
Letter 0484C	The IRS wants a completed
Letter 0525	Updates you on proposed changes after an IRS examination. Any changes are explained and details the refund due or taxes owed.
Letter 531	IRS Notice of Deficiency. The information the IRS received about you was different from what you reported on your return.
Letter 0668D(LP 68)	The IRS released their levy.
Letter 0549C	Your tax bill was paid.
Letter 0681C	The IRS accepted your payment proposal. However, this is not a formal Installment Agreement.
Letter 0757C	You did not adhere to the terms of your Installment Agreement.
Letter LT 11	The IRS plans to seize your property or rights to property.
Letter 1058	The IRS has not received your payment. It plans to seize your property or rights to property.
Letter 1615 (LT 18)	You must respond to the IRS within 10 days of this notice regarding past due tax returns.
Letter 1737 (LT 27)	Complete and sign Form 433F, Collection Information Statement.
Letter 1961C	Your application for a Direct Debit Installment Agreement was declined. It explains why and what you need to do to qualify.
Letter 1962C	Your application for a
Letter 2050 (LT 16)	The IRS is trying to collect unpaid taxes from you from returns that have been filed or from returns that have not been filed.
Letter 2257C	The IRS is providing the payoff amount that you requested.
Letter 226-J	An IRS letter to large employers notifying them that they may be liable for an Employer Shared Responsibility Payment (ESRP).
Letter 2271C	A request for an Installment Agreement has been approved. It explains the fees and how to qualify for a Low Income Fee Reduction. The letter may also request missing information.
Letter 2272C	An IRS letter explaining why your request to pay the balance due in installments was declined.
Letter 2273C	A confirmation letter of your request to pay the balance due in installments. It contained the amount to pay, fees charged, and where to send payment. Instructions on how to apply for the Low Income Fee Reduction included.
Letter 2318C	A response to a request to pay taxes due to payroll deductions. It also explains the fees that are charged.
Letter 2357C	The IRS is admitting that it did not send you the balance due notices that it should have.
Letter 2603C	The IRS accepted your installment agreement. The IRS will file a Notice of Federal Tax Lien on your personal property.
Letter 2604C	The IRS has accepted your request for installment payments. This IRS letter provides the monthly payment, the address where to send it, and the fees charged. The letter also provides instructions on how to apply for the Low Income Fee Reduction.
Letter 2761C	The IRS is requesting your combat zone service dates to ensure that it provides you with the special provisions and protection of the combat zone deferment. Copies of military orders or other documentation to support your time served may be requested. Civilians working in support of the Armed Forces may be required to provide a Letter of Authorization or a letter from their employer.
Letter 2789C	An annual reminder notice, as required by law, of the balance due to the IRS. It explains that penalties and interest continue to accrue until the balance is fully paid.
Letter 2840C	Confirms your Installment Agreement request and includes the payment amount and due date. This IRS letter explains the fees charged for paying monthly and explains how to apply for the Low Income Fee Reduction (if you qualify).
Letter 3030C	Provides an explanation of the tax, penalty, and interest still due on your account.
Letter 3127C	A confirmation of your request to make a change to your Installment Agreement. This IRS letter explains the fees for the change. Changes can be to the payment amount or due date, or it can include additional liabilities.
Letter 3174	A reminder of taxes due after the IRS has sent a Notice of Intent to Levy.
Letter 3217C	The IRS has accepted your request to pay the balance in installments. This IRS letter provides your payment amount, the due date, and fees charged. The letter also provides instructions on applying for the Low Income Fee Reduction (if you qualify).
Letter 3228 (LT 39)	A request to pay the balance due within 10 days using the envelope provided.
Letter 3500	The IRS has received your documents, and it needs additional time to review them.
Letter 3572	Your Federal Income Tax Return has been selected for examination. The IRS auditor requests that you call to schedule an audit appointment.
Letter 4883C	The IRS received your federal income tax return but needs more information to verify your identity in order to process your tax return accurately.
Letter 4903 (LT 26)	You must file your tax returns immediately. The IRS has previously contacted you, but it did not receive a response.
Letter LP 47	The IRS is trying to locate the person identified in the letter and is requesting that you provide their new address.
Letter LP 59	The IRS has not received a response to the notice of levy it previously sent.
Audit Letter 2205	The IRS manages audits either by mail or through an in-person interview to review your records. The interview may be at an IRS office (office audit) or the taxpayer’s home, place of business, or accountant’s office (field audit).
Letter 915	You recently underwent an audit, and the IRS informs you that you now owe taxes.

Key takeaways

IRS Letter 950 is a notice proposing changes to your tax return, often following an audit or review.
You have 30 days to respond, either by agreeing to the changes or filing an appeal if you disagree.
Ignoring the letter can lead to penalties, interest, and potential enforcement actions.
Seek professional help if the adjustments are complex or if you need assistance with the appeals process.
Promptly responding can help avoid further complications and resolve the issue efficiently.

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