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IRS Notice vs Audit: What’s the Difference?

Updated ·

Many taxpayers become worried after receiving a letter from the IRS and immediately wonder whether they are being audited. In reality, most IRS notices are not audits.The IRS sends millions of notices every year for routine tax account issues, refund reviews, identity verification, balances due, and informational updates.

What Is an IRS Notice?

An IRS notice is a letter sent by the IRS regarding your tax account. Notices are commonly generated automatically by IRS processing systems.

IRS notices may involve:

  • Balances due
  • Refund delays
  • Identity verification
  • Income reporting differences
  • Changes made to tax returns
  • Requests for additional information

Common notices include:

  • CP14 – balance due notice
  • CP501 – reminder notice
  • CP2000 – income mismatch notice
  • CP05 – refund review notice
  • 5071C – identity verification notice

What Is an IRS Audit?

An IRS audit is a review or examination of tax return information and supporting records. Audits are generally more detailed than routine IRS notices.

The IRS may request documentation, explanations, or additional records during an audit process.

Does Receiving an IRS Notice Mean You Are Being Audited?

No. Most IRS notices are not audits.

Many notices are informational or involve automated account reviews rather than formal examinations.

Can an IRS Notice Lead to an Audit?

In some situations, unresolved tax issues or missing information may lead to additional IRS review. However, receiving a notice alone does not automatically mean an audit will occur.

How Can You Tell the Difference?

IRS notices usually contain a notice number such as CP14, CP2000, or CP05.

Audit-related letters may specifically reference examinations, requests for records, or audit procedures.

What Should You Do After Receiving an IRS Notice?

You may wish to:

  • Read the notice carefully
  • Check the notice number
  • Compare the information with your records
  • Review any deadlines listed in the notice

If you have questions about the notice, you may wish to contact the IRS or a qualified tax professional.

Can IRS Notices Be Mistakes?

Sometimes notices are triggered by delayed payments, missing forms, processing issues, or mismatched records. Reviewing the information carefully is generally recommended.

What Happens If You Ignore an IRS Notice?

Ignoring IRS notices may lead to additional notices, account changes, penalties, interest, or continued review activity depending on the type of notice involved.

Read more here: What Happens If You Ignore IRS Notices?

Bottom Line

Most IRS notices are not audits. Many are routine account notices related to balances, refunds, identity verification, or informational changes.

Reading the notice carefully and understanding the notice number can help you better understand what the IRS is communicating.

Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice.

Disclaimer
The information provided on Accounting Portal is for general informational and educational purposes only and does not constitute professional accounting, tax, financial, or legal advice. While we strive for accuracy and timeliness, no representation or warranty is made regarding completeness or reliability. Always consult a qualified professional before making any business, tax, or financial decisions. Neither Accounting Portal nor its authors are liable for any loss or damage resulting from the use of this information.

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