The envelope is the worst part. Official letterhead, a reference number, and a paragraph that manages to sound both bureaucratic and ominous. People describe genuinely losing sleep over letters that turn out to be entirely routine.

So, first: the great majority of correspondence from a tax authority is automated, routine, and resolves with a single documented response. A small minority is a genuine examination. They look different, and it’s worth knowing how to tell.

Do this first

Open it. This sounds facetious. It isn’t — unopened notices are common, and every one of them has a clock running.

Find the deadline. There will be one, usually stated prominently. Note it. Some deadlines are administrative and flexible; others are hard and attached to rights that expire. Until you know which kind you have, treat it as hard.

Don’t respond immediately. The instinct to fire off a reply, or to call and explain, is understandable and usually counterproductive. The first response shapes everything after it. A day spent understanding the notice is time well spent.

Don’t ignore it. Between responding hastily and ignoring it entirely, ignoring it is far worse. Notices escalate on their own schedule, and the options available narrow at each stage.

The rough taxonomy

Notices vary enormously in seriousness. Broadly, in ascending order:

Informational

Some correspondence tells you something without asking for anything — a return was processed, a payment was received, an account changed. No response needed. Read it, file it, move on.

Mathematical or clerical adjustments

An arithmetic error or an internally inconsistent entry was corrected, and you’re being told the result. Sometimes the correction is right, in which case there’s little to do beyond checking the revised figure. Sometimes it isn’t — the correction was based on a misreading, and the original entry was correct. Either way, verify before accepting.

Matching notices

The most common category by a distance. Tax authorities receive copies of the income forms issued to you and match them against what appears on your return. A mismatch generates an automated notice proposing an adjustment.

Crucially, these are proposals, not determinations. And they’re frequently wrong — not because the system is broken, but because it has no way to know context. Common causes:

  • The income was reported, but on a different line or schedule than the system expected
  • A form was issued in error, or duplicated
  • The gross amount was reported to the authority but your return correctly showed a net figure after allowable offsets
  • A sale was reported without cost basis, making the entire proceeds look like gain

That last one is worth dwelling on. If a brokerage reports a sale without what you originally paid for the asset, an automated system may treat the whole amount as profit. The proposed tax can be startling and entirely fictional. Establishing basis usually resolves it completely.

Examinations

An actual audit, where a return has been selected for review. These are far less common than the categories above and are clearly identified as examinations. They range from a correspondence review of a single item through to a comprehensive review conducted in person.

This is the point at which representation stops being optional in any practical sense.

Collections

Correspondence about an amount already assessed and unpaid. These escalate through defined stages, and some carry rights that expire — including the right to request review before enforcement action. Deadlines here are genuinely hard.

Verifying it’s real

Tax authority impersonation is a persistent and effective fraud. Some reliable distinctions:

  • Legitimate correspondence generally arrives by post, not by phone call, text, or email
  • Legitimate authorities do not demand payment by gift card, wire transfer, or cryptocurrency
  • Legitimate authorities do not threaten immediate arrest over the phone
  • Legitimate correspondence identifies the specific tax year and issue, not a vague unpaid balance
  • You always have the right to appeal and to representation, and legitimate correspondence says so

If something arrives by phone or email claiming to be a tax authority, treat it as fraudulent until independently verified. Don’t use contact details from the message itself — look them up separately.

What good representation actually changes

With authorization on file, a credentialed representative can deal with the authority directly. In practice:

Correspondence redirects. The letters and calls come to your representative instead of you.

Responses get scoped. Information requests are answered specifically. Unrepresented taxpayers, trying to be helpful, routinely volunteer material that expands the review into areas nobody was looking at.

You’re not answering on the spot. Questions get answered after preparation rather than improvised, which is where unrepresented taxpayers most often damage their own position.

Someone knows what’s normal. Whether a request is standard or unusual, whether a proposed adjustment is reasonable, whether an outcome is worth appealing — these are judgment calls that come from having seen a lot of them.

If you genuinely owe it

Sometimes the notice is right and the amount is due. That’s a manageable problem.

The questions then become whether the amount is calculated correctly (independently worth checking), whether relief from penalties is available in your circumstances, and what payment arrangements you qualify for. There are more options than most people realize, and they depend on your situation rather than the size of the balance.

Owing money is a problem with solutions. Not responding is what turns it into a serious one.

The practical summary

Open it. Find the deadline. Don’t reply the same day. Get it looked at by someone who reads these regularly.

Most of the time you’ll be told it’s routine and here’s the one document that resolves it. Occasionally you’ll be told it’s serious and here’s what we do about it. Either way, you’ll know — and knowing is most of what the sleepless nights are actually about.

This article is general information, not tax advice. If you’ve received a notice, send it to us before you respond — and mention the deadline. See also audit representation.