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Ignoring an IRS audit letter typically escalates from a CP2000 or examination letter to a 30-day letter (Letter 525), then to a 90-day Statutory Notice of Deficiency (Letter 3219). Once the 90-day window passes without a Tax Court petition, the IRS assesses the tax. From there it moves to collection: Notice and Demand, Final Notice of Intent to Levy (Letter 1058), and ultimately bank levies, wage garnishment, and federal tax liens. Each escalation closes off less expensive options.
The first letters are usually fixable. A CP2000 mismatch can often be resolved by sending the missing information. A 30-day letter response with documentation can close the audit. A 90-day Notice of Deficiency requires a Tax Court petition within the deadline to preserve pre-payment Tax Court review — and that deadline is statutory and cannot be extended.
Once the IRS assesses tax following a missed Tax Court deadline, the taxpayer's remaining options are: pay and file a refund suit, audit reconsideration (discretionary), or a Collection Due Process hearing after a Final Notice of Intent to Levy. Each of these is procedurally heavier than just responding to the original audit.
The most expensive mistake is letting the 90-day window pass. The Tax Court petition is short, costs less to file than the eventual collection costs, and stops everything while it's pending.
This answer is general legal information, not specific legal advice. Pereira & Associates can review your particular facts in the free consultation. Schedule one →
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