Pulling an envelope from the IRS or California Franchise Tax Board out of your mailbox can ruin a perfectly good Tuesday. The instinct is usually one of two things: tear it open and panic, or shove it in a drawer and pretend you didn’t see it. Neither helps. At Tax Crunch, we work with Bay Area individuals and small business owners who get these notices, and the patterns are almost always the same. People who handle the first two days well tend to come out fine. People who react impulsively often make their situation worse before a professional ever sees the file.
Confirm the notice is real before you do anything else
Tax scam letters circulate every year, especially around filing season and after major tax law changes. Genuine IRS correspondence arrives through the U.S. Postal Service, references a specific tax year, includes a notice or letter number in the upper right corner (something like CP2000, CP75, Letter 525, or Letter 2205), and never demands payment via gift card, wire transfer, or cryptocurrency.
If anything feels off, cross-check the notice number on IRS.gov under “Understanding Your IRS Notice or Letter.” California publishes a similar lookup on ftb.ca.gov. If your notice doesn’t appear in either database, that is a serious red flag.
Read the entire letter twice, then mark the deadline
Most audit notices bury a response deadline near the end. For IRS correspondence audits, you typically have 30 days from the date printed on the letter (not the date you opened it). The FTB usually gives you 30 to 60 days depending on the notice type.
Write the deadline on your calendar. Then back it up by ten days. That earlier date becomes your real internal deadline, because pulling records and drafting a measured response takes longer than anyone expects.
Audit notices fall into three categories, and knowing which one you’ve received changes the strategy entirely:
- A correspondence audit, handled entirely by mail, often a CP2000 questioning specific line items
- An office audit, where you bring documents to an IRS or FTB office
- A field audit, where an agent visits your home or business, usually reserved for higher-stakes issues
CP2000s in particular get mistaken for bills. They are not bills. They are proposed adjustments, and you have a right to disagree.
Why you shouldn’t call the agency yet
This is the hardest advice to follow. Most people want to clear things up immediately by calling the number on the letter. Don’t.
Anything you say to an IRS or FTB representative becomes part of your file. Casual remarks like “I think my contractor told me that was deductible” can widen an audit from a narrow inquiry into something much broader. Until you understand exactly what is being questioned and why, silence is protective.
If the notice requests documents, you have the right to request more time. A short written extension is almost always granted for first-time responders.
Pull your records, but send nothing yet
Locate the return for the tax year in question along with supporting documents: 1099s, W-2s, K-1s, receipts, mileage logs, bank statements, contemporaneous notes. If a particular deduction is being questioned, start there.
Resist the urge to mail a thick stack of paperwork to “prove you’re honest.” Auditors review what you send. Volunteering unrequested records can open new lines of inquiry that were never on the table. The goal is targeted, organized documentation that responds to exactly what the agency asked about, nothing more.
Know your rights before you respond
The IRS publishes a Taxpayer Bill of Rights that includes the right to representation, the right to appeal, and the right to a fair and just tax system. The FTB maintains parallel protections under California law. Both are worth reading directly on irs.gov and ftb.ca.gov before you draft any response.
You also have the right to authorize a CPA or tax attorney to act on your behalf using Form 2848 (IRS Power of Attorney) or FTB Form 3520. Once filed, the agency communicates with your representative rather than you. For most people, that single step cuts the stress level in half.
When to bring in a professional
Some notices are routine. A CP2000 over a missing 1099-INT for $400 in interest income usually doesn’t require representation. You verify the figure, agree or disagree, and the matter closes.
Bring in a CPA or tax attorney when any of the following are true:
- The disputed amount exceeds a few thousand dollars
- The notice covers multiple tax years or multiple issues
- It’s an office audit or field audit rather than correspondence
- Self-employment income, rental property, or business expenses are at issue
- You suspect the original return contained errors
Audits involving Schedule C income, equity compensation from Bay Area tech employers, RSU vesting, or short-term rental income tend to escalate faster than people anticipate. Those are areas where representation pays for itself quickly.
How Tax Crunch handles audit response
When clients reach us inside that 48-hour window, we read the notice line by line and pull the original return alongside it. From there we build a timeline of what the agency is actually claiming, what documentation supports the filed position, and what a measured written response should contain. Most correspondence audits close after one or two well-prepared letters. Office and field audits require more work but follow the same logic: respond only to what was asked, anchor every claim to a document, and never volunteer information that wasn’t requested.
The bottom line
A tax notice is a deadline, not a verdict. The people who handle audits well are the ones who slow down for 48 hours, verify what they’re dealing with, organize their records, and bring in a qualified professional before they say a word to the agency. If you’ve just opened one of these letters and you’re not sure what to do next, reach out to Tax Crunch before the response clock runs down. A short first conversation usually clarifies more than any amount of late-night searching online.
