The IRS 30-Day Letter: What to Do | Kathryn Meyer Law PC

Read the deadline first, then decide whether you agree. A 30-day letter is how the IRS ends an audit that closed with changes you have not accepted: it encloses the examiner's proposed adjustments and gives you, generally, 30 days from the date of the letter to accept them or ask for an appeal. If you do neither, the next step is usually a notice of deficiency, which starts a strict 90-day clock to go to the U.S. Tax Court.

The letter matters because it is the last point at which you can take the dispute to the IRS Independent Office of Appeals before the case becomes a court question. Below is what the letter means, the three paths it opens, and what a protest has to contain. For the wider process, see Kathryn Meyer's page on IRS audits and examinations.

What is the 30-day letter, exactly?

IRS Publication 3498, The Examination Process, explains that if you and the examiner do not reach agreement, you receive "a letter (known as a 30-day letter)" telling you about your right to appeal the proposed changes. The letter sets out the changes the examiner proposes, including the additional tax and any penalties for each period, and explains which steps to take for each choice, and it is worth following those instructions exactly, because the address and the form it names are the ones that will route your response correctly.

It is not a bill, and it is not yet a final determination. It is an invitation to respond. That also means the deadline is real: the 30 days run from the date printed on the letter, not from the day you open it. If you need more time, contact the person named in the letter before the date passes and keep a record of the request.

How the end of an audit unfolds, step by step

The examiner proposes changes. You receive an examination report showing each adjustment, the additional tax and any penalty for each period.
You can talk it through first. Publication 5 says you may discuss the issues with the employee named in the letter and, if that does not resolve them, ask for a discussion with the employee's supervisor.
Mediation, if the case qualifies. Fast Track Settlement keeps the case with the examiner while a trained Appeals employee acts as a neutral; you can withdraw at any time and keep your usual appeal rights for anything left unresolved.
The 30-day letter arrives. It explains your appeal rights and what to send for each choice.
You agree, protest or stay silent. Agreement closes the audit; a protest sends the case to Appeals; silence leads to a notice of deficiency.

What are your options?

Your choice	What you do	What usually happens next
Agree	Sign the agreement form in the letter and pay, or ask for a payment plan	The tax, interest and penalties are assessed and the audit closes
Disagree and appeal	Send a small case request or a formal written protest by the deadline	The case goes to the Independent Office of Appeals for a conference
Disagree, but do not appeal	Nothing, or a reply that does not request Appeals	A notice of deficiency by certified or registered mail, with 90 days to petition the Tax Court

Before choosing, you can also ask for a meeting or call with the examiner's supervisor. In some cases the IRS offers Fast Track Settlement, a mediation run by a specially trained Appeals employee while the case is still with the examiner; for small business and self-employed cases it must start before a 90-day letter is issued, and the IRS prefers it to start before the 30-day letter.

If you agree, how much will you owe?

Agreeing means signing the form and paying the additional tax, interest and any penalties. According to Publication 3498, interest is generally figured from the due date of the return to the date you pay. If you do not pay when you sign, you will get a bill; if the total is under $100,000 and you pay within 21 calendar days, the IRS will not charge more interest or penalties, and if it is $100,000 or more that window is 10 business days. If you cannot pay in full, the IRS suggests paying what you can and requesting an installment agreement for the rest; our page on IRS payment plan options compares them. The wider picture is under IRS collections and enforcement.

Before you sign, read the penalties line closely. If the report proposes an accuracy-related penalty, there may be grounds to contest it even if you accept the tax. Our page on penalties the IRS can add after an audit explains the common ones.

If you disagree, what does the protest have to say?

To get an Appeals conference you must put your disagreement in writing. Which kind of writing depends on the amount:

Small case request. If the total proposed change in tax and penalties is $25,000 or less for each tax period, you may send a brief written statement listing the disputed issues and why you disagree, or use Form 12203, Request for Appeals Review.
Formal written protest. Required if the total for any period is more than $25,000; if any one period is over the line, the protest must cover all periods. Partnership and S corporation cases need a formal protest regardless of the amount; partnerships also follow the separate centralized partnership audit rules.

Publication 5 lists what a formal protest must include:

Your name, address and a daytime telephone number.
A statement that you want to appeal the changes the IRS proposed.
The tax periods involved, each disputed issue, the proposed change, and why you disagree with each one.
The facts supporting your position on each issue.
The law or other authority you rely on.
A signed penalties of perjury declaration (a representative who prepares the protest uses a version stating whether they know the facts personally).

Arguments must be grounded in the tax law. Appeals will not consider objections based only on moral, religious, political, constitutional or similar grounds.

What should you do before the case goes to Appeals?

Give the examiner everything you want considered. Publication 5 warns that new information or new issues raised for the first time at Appeals may be sent back to the examination function first, which delays the case. It is usually better to put your documents in the record now.

Check the calendar as well. The IRS generally wants at least 365 days left on the assessment statute when Appeals receives the case, so you may be asked to sign a consent extending it (see how far back the IRS can audit for how that date is set). You can refuse or limit a consent, but if there is not enough time left, Appeals will not accept the case. What happens once the case reaches Appeals is covered in what happens at an IRS Appeals conference.

Interest keeps running while you dispute. Publication 3498 notes that you can stop it from growing on the amount you expect to owe by making an advance payment or a deposit under section 6603 of the Code.

What if you let the 30 days pass?

If you do not respond, or you do not settle with Appeals, the IRS sends a statutory notice of deficiency under section 6212 by certified or registered mail. Under section 6213(a) you then have 90 days from the mailing (150 days if the notice is addressed to someone outside the United States) to petition the U.S. Tax Court, which Publication 5 describes as generally a "prepayment" forum. The IRS says it cannot extend that 90-day period. If no petition is filed, the tax is assessed and you receive a bill.

Missing the 30-day letter therefore does not end your rights, but it does skip the administrative appeal; Publication 5 notes that most disputes can be settled at the Appeals level without litigation. If the letter is part of a stack of IRS correspondence and you are not sure which notice is which, our post on what to do if you receive an IRS notice is a good starting point. And if the tax is assessed and you later find records the IRS never saw, audit reconsideration may still be available while the balance is unpaid.

What changes the answer

The amount for each period. A small case request is available only when the total proposed change in tax and penalties, or claimed refund, is $25,000 or less for every period in the report (Publication 5).
The kind of taxpayer. Partnership and S corporation cases need a formal protest at any amount.
The kind of tax. Employment tax examinations follow their own appeal rules (Publication 5146); some worker classification issues come with a separate notice under section 7436 that has its own Tax Court deadline.
Time left on the assessment date. If less than about a year remains, Appeals may require a consent before accepting the case.
Whether you would rather pay first. Instead of contesting the proposed tax before paying, you can pay, file a claim for refund and, if it is denied, sue in a U.S. District Court or the U.S. Court of Federal Claims (Publication 5).

For example: deciding between a small case request and a formal protest

For example, suppose an examiner's report for a self-employed taxpayer proposes $18,000 of tax and a $3,600 accuracy penalty for 2023, and $9,000 of tax for 2024. Each period totals $25,000 or less, so a brief written statement listing the disputed issues and the reasons, or Form 12203, would be enough to reach Appeals.

Change one number: if 2023 had shown $24,000 of tax and a $4,800 penalty, that period would total $28,800. Because one period crosses the line, Publication 5 requires a formal written protest covering both years, with the facts, the law relied on and a signed penalties of perjury statement. In either version, the response is due by the date the letter sets. This is a hypothetical, not a real case.

Common mistakes with a 30-day letter

Counting from the day you opened it. The 30 days run from the date on the letter.
Sending a protest that only says "I disagree". Above $25,000 a period, Appeals needs the issues, facts, law and the signed declaration.
Holding documents back for Appeals. New information is usually sent back to the examiner, which delays the case.
Signing the agreement form to make the problem go away. Agreement means the tax and penalties are assessed; check each adjustment and the penalty line first.
Ignoring a consent request. Without enough time on the assessment date, Appeals will not take the case.

What to do this week

Write the response date from the letter on your calendar, along with the date the letter is dated.
Total the proposed tax and penalties for each period to see whether a small case request is possible.
List each adjustment and mark the ones you accept and the ones you dispute.
Collect the records that support each disputed item and send anything the examiner has not seen.
Decide who will sign and send the response; a representative needs a power of attorney on file.
Send the response to the address in the letter by a method that gives you proof of mailing, and keep a copy.

Frequently asked questions

Can you get more time to answer a 30-day letter?

Ask before the date passes. Call or write to the person named in the letter, explain why you need time, and keep a record of the request and the answer.

Who can represent you at Appeals?

Publication 5 says you can represent yourself or appoint someone authorized to practice before Appeals, such as an attorney, certified public accountant or enrolled agent. Someone who is not qualified can attend as a witness but cannot represent you. Our page on how a tax attorney represents you before the IRS explains the power of attorney a representative needs.

Is a CP2000 notice the same as a 30-day letter?

No. A CP2000 comes from an automated matching program, not from an examiner's audit, and it has its own reply process. See whether a CP2000 notice is an audit and how to respond.

Does the same process apply to a worker classification audit?

Employment tax cases follow Publication 5146, and some classification issues come with a Notice of Employment Tax Determination that allows a Tax Court petition. Our page on what happens in an IRS worker classification audit covers that route.

Can you skip Appeals and go straight to court?

Yes. If you do nothing, the notice of deficiency that follows lets you petition the Tax Court without paying first. Alternatively you can pay and claim a refund; our page on how long you have to claim a tax refund explains the time limits for that route.

What happens if Appeals does not settle the case?

The IRS issues a notice of deficiency, and the 90-day period to petition the Tax Court begins. Publication 5 notes that most disputes can be settled informally at Appeals, but a settlement is never assured.

Getting help before the deadline

A protest is a legal document: it frames the issues, sets out the facts, and often decides how the case is argued later. Kathryn Meyer spent more than two decades in the IRS Office of Chief Counsel and can review the examination report, the deadline and the strength of each adjustment with you. If you have a 30-day letter, contact the firm or call (571) 560-8674 while there is still time to respond.

Sources

Back Home