Opening your mailbox to find a letter from the IRS—or New York State’s Department of Taxation and Finance—is enough to spike anyone’s blood pressure. But before you panic, know this: most tax notices aren’t audits, and they aren’t accusations either. Often, they’re just routine requests for clarification, small payment adjustments, or follow-ups on something missing.

The key is responding quickly, correctly, and with a level head. Here’s how to do that.

1. Start by Reading the Notice Carefully

Set the envelope aside for a minute if you need to. Then open it and read the entire letter. Most tax notices are focused on one specific issue—maybe the IRS adjusted your return, thinks you underpaid, or didn’t receive a form. New York State notices often follow the same pattern, flagging small gaps or inconsistencies in reported income, sales tax filings, or payroll reporting.

The notice will tell you what they’ve flagged and what they want you to do next. Don’t skim. Dates, response instructions, and reference numbers all matter.

Some notices don’t require a reply if you agree with the adjustment. But even in those cases, mark your calendar. If the notice includes a deadline and you miss it, things can escalate quickly.

2. Compare the Notice with Your Records

Pull out your copy of the return, relevant bank statements, receipts, or payroll reports. Look for where the numbers don’t match.

• If the notice says you owe more and you agree, follow the payment instructions in the letter.
  
  
• If you disagree, write a short, clear response and include any documentation that proves your case.
  
  
• If you’re not sure, don’t guess—this is a good time to check with your accountant.
  
  

New York notices often include a checklist or set of boxes to indicate how you’re responding. Fill these out fully and don’t forget to include the bottom stub from the letter so they can connect your response to your file.

3. Respond on Time…and Keep a Copy of Everything

Most notices give you 30 days to respond. Don’t cut it close. Mail delays, missing paperwork, or misdirected responses can turn a simple fix into a more complicated issue.

When you send your reply:

• Include a cover letter explaining your position.
  
  
• Attach copies (not originals) of any documents that support your side.
  
  
• Make a copy of your full submission for your own records.
  
  

If the notice includes a barcode or identifier, include it on every page. This helps the agency match your documents to the case quickly.

For IRS notices, you may be able to upload your response online using their Document Upload Tool—but check the specific instructions on your letter first.

4. If You Can’t Pay, Request a Payment Plan

You don’t need to be able to pay in full to respond. Both the IRS and New York State allow for installment agreements. In many cases, you can apply for these online or by calling the number on your notice.

Starting a payment plan early helps reduce penalties and keeps you in good standing while you resolve the issue.

5. Ask for Penalty Relief if It’s Warranted

If the notice includes penalties or interest you think are unfair—say, because of a natural disaster, medical emergency, or another reasonable cause—you may qualify for relief.

The IRS offers a formal process for requesting penalty abatement. If it’s your first time receiving a notice and you’ve been compliant in previous years, you may be eligible for “first-time abatement.” New York State offers similar relief in certain situations, but it requires documentation and a written request.

6. Don’t Go It Alone if the Issue Is Complex

If the notice involves a large dollar amount, multiple years, or you just aren’t sure how to respond, loop in a tax professional. A CPA or tax attorney can help you understand the scope of the issue and make sure your reply is accurate and persuasive.

You can also grant them authority to speak to the IRS or New York on your behalf using a power of attorney form.

7. Keep the Paper Trail

Once you’ve replied, don’t toss anything. Create a folder—digital or physical—that includes the original notice, your response, mailing confirmations, and all supporting documents.

If another notice arrives, or an agent calls with questions, you’ll want that record close at hand.

Tax notices aren’t always pleasant, but they don’t have to be panic-inducing. Most are procedural and can be cleared up quickly with the right information. The worst thing you can do is ignore them.

If you’ve received a notice and aren’t sure how to respond, our team can help review, explain, and act on your behalf to keep things on track—before the issue snowballs.