IRS Notices Explained: CP Notices vs. IRS Letters

(And What Happens If You Ignore Them)

Opening mail from the Internal Revenue Service has a magical way of ruining an otherwise good day. But before you panic—or worse, pretend the envelope never arrived—let’s talk about what you’re actually looking at.

Not all IRS notices are the same, and how you respond matters just as much as whether you respond.

Say 'you got a letter from the IRS' without saying 'you got a letter from the IRS.'

What Is an IRS CP Notice?

A CP notice is a computer-generated notice.CP literally stands for Computer Paragraph.

That means:

• No IRS employee reviewed your return

• No agent analyzed your facts

• No one exercised discretion

A system flagged something, and the computer sent a notice.

Where CP Notices Come From (And Why That Matters)

CP notices are issued by automated IRS processing systems, usually out of large service centers like Austin, Kansas City, or Ogden.

These systems:

• Compare your return to W-2s, 1099s, and prior filings

• Automatically detect mismatches

• Generate standardized notices without context

Think of CP notices as algorithmic alerts, not accusations.

They are often wrong—but they are never optional.

What Is an IRS Letter?

An IRS letter is usually generated after a human gets involved.

These letters:

• Are tied to audits, examinations, or enforcement actions

• Reference specific issues and documentation

• Require careful, strategic responses

If a CP notice is a warning light, an IRS letter is someone walking over to the car with a clipboard.

The Critical Part Most People Miss:

How was I supposed to know?

What Happens If You Don’t Reply to a CP Notice

This is where things quietly go sideways. When you receive a CP notice, your account is placed into what is best described as a virtual suspension queue.

Here’s how it works:

• The IRS sets a response deadline (often 30 days)

• Your account is paused waiting for your reply

• The system assumes you might respond

• Nothing final happens—yet. . .

But once that deadline passes?

The system:

• Resumes processing

• Assumes the IRS position is correct

• Finalizes the change automatically

No hearing. No phone call. No second chance email.

The Countdown You Don’t See

Even if you respond on time, the IRS builds in an internal buffer—usually 7 to 15 additional days—to account for mail delivery - this is why timing matters. If your response is late and unprovable, the system moves on without you.

The “Mailbox Rule” (Yes, It Still Matters)

The IRS follows what’s commonly known as the mailbox rule: If your response is postmarked by the deadline, it is considered timely—even if the IRS receives it later.

But here’s the catch:

• You must be able to prove it was mailed on time

• Certified mail, return receipt, or tracked delivery matters

• “I’m pretty sure I mailed it” does not count

Mailing something on the last day without proof is a gamble. And the IRS always wins ties.

Real Consequences of Not Responding

Failing to reply to a CP notice can result in:

• Automatic tax assessments

• Loss of appeal rights

• Additional penalties and interest

• Refund offsets

• Escalation to enforced collection

What started as a computer mismatch can quietly turn into a legally enforceable debt. All without a single IRS employee ever speaking to you.

What Not to Do

❌ Ignore the notice

❌ Assume the IRS is correct

❌ Call the IRS without preparation

❌ Miss deadlines

❌ Respond emotionally or incompletely

CP notices don’t require panic—but they do require action.

What You Should Do

✔ Read the notice carefully

✔ Identify the exact issue raised

✔ Preserve every deadline

✔ Gather supporting documentation

✔ Respond correctly—or get help before responding

How ExFed Tax Helps

While most individuals with IRS experience may understand that the IRS does send automatic letters, and they may have sent a few letters themselves, we at ExFed Tax know how these notices are generated because we used to work inside the system. Our founder has designed compliance processes, penned automatic letters, worked with IT developers and implemented business rules related to automatic letters and notices. (Cough - research credit).

We understand:

• How CP notices are triggered

• When silence becomes consent

• How to stop automated assessments before they lock in

Whether you’ve received:

• A CP notice that doesn’t make sense

• Multiple notices that seem to contradict each other

• Or something that’s been sitting unopened (no judgment… okay, minimal judgment)

We can help you fix it before it escalates.

Next Steps

If you’ve received an IRS notice or letter, don’t let a computer decide your tax outcome.

Schedule a consultation, or Email us: hello@exfedtax.com

ExFedTax — We left the IRS. You’re welcome.