IRS Letter 950 is a 30-day letter: it delivers the examiner’s proposed changes to your return, tells you how much more tax the IRS believes you owe, and gives you 30 days from the date printed on the letter to respond. Do nothing and the IRS treats the proposal as final and moves to assess. Respond within the window and you can either agree and close the case, send documents that challenge specific adjustments, or file a written protest requesting a hearing with the IRS Independent Office of Appeals. Letter 950 shows up most often after audits of refundable credits such as the Earned Income Tax Credit and the Additional Child Tax Credit, because those credits pay out cash refunds the IRS wants to verify.
What’s Inside the Letter
The letter comes with an examination report. The report identifies the tax year, lists each line item the examiner adjusted, and shows the recalculated tax. The bottom line is a proposed deficiency (extra tax you owe) or, less often, an overassessment in your favor. Read the report line by line before deciding anything, because your response has to speak to the specific items the examiner changed, not the return as a whole.
The response deadline is printed on the first page. Thirty days is the standard. If you need more time to gather records or find a representative, call the number on the letter before the deadline runs out and ask for an extension. Waiting until day 31 to ask is too late.
Confirm the Letter Is Real First
Fake IRS notices circulate constantly. Before you send documents or sign anything, cross-check the phone numbers and mailing addresses on the letter against what IRS.gov publishes. A genuine letter references your Social Security number (usually partially redacted), the exact tax year, and figures that match a return you actually filed. The IRS opens contact by mail, not by email, text, or social media. If any of that is off, treat it as a phishing attempt.
If You Agree With the Changes
When the report is correct, sign Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment. That authorizes the IRS to assess the additional tax, penalties, and interest immediately, and it waives your right to take those specific adjustments to Tax Court.1Internal Revenue Service. Form 870 – Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment
Pay as soon as you sign. Interest compounds daily and runs from the original due date of the return, not from the day Letter 950 arrived. The IRS charged individual taxpayers 7% annual interest on unpaid balances in the first quarter of 20262Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026 and 6% in the second quarter.3Internal Revenue Service. Internal Revenue Bulletin: 2026-08 Rates reset quarterly. Every week of delay costs real money.
If You Disagree: What to Send
Disagreeing means proving the examiner got a specific item wrong. Match your evidence to the adjustments in the report; don’t dump your whole file.
Income Disputes
Pull every W-2 and 1099 you received for the year. Self-employment income on Schedule C needs deeper support: bank deposit records, invoices, credit card slips, Forms 1099-NEC and 1099-K, and whatever bookkeeping you kept.4Internal Revenue Service. Recordkeeping For expenses, canceled checks, account statements, and receipts showing amount and business purpose.
Residency for a Qualifying Child
EITC audits almost always turn on whether a qualifying child lived with you for more than half the year. School records showing the child’s name and your address are the single strongest piece of evidence. If the child wasn’t in school, medical records or a daycare provider’s statement work too. The records must cover more than six months; one semester of school records usually isn’t enough on its own.5Internal Revenue Service. Topic No. 654, Understanding Your CP75 or CP75A Notice, Request for Supporting Documentation Layer in utility bills, a lease, or mortgage statements in your name at the same address.
Relationship to the Child
You have to show the child fits an IRS-recognized relationship: son, daughter, stepchild, foster child, sibling, or a descendant of any of them. A birth certificate or adoption decree is cleanest. If the child was 19 or older at year-end, add official school transcripts proving full-time student status under 24, or documentation of permanent and total disability.5Internal Revenue Service. Topic No. 654, Understanding Your CP75 or CP75A Notice, Request for Supporting Documentation
Child Tax Credit
For the CTC or Additional CTC, prove the child was under 17 at year-end, lived with you more than half the year, and is a U.S. citizen, national, or resident alien. Each qualifying child must also have a Social Security number valid for employment, issued before the return’s due date.6Internal Revenue Service. Child Tax Credit A birth certificate plus school records usually covers age and residency at once.
Send copies, never originals. Organize the packet so each document ties to a specific line in the examination report. Examiners handle hundreds of cases; a submission they can follow gets a better read than a pile of loose paper.
How to Request an Appeal
Your response to Letter 950 is what gets you into the IRS Independent Office of Appeals. The form of the request depends on the dollar amount.
If total tax, penalties, and interest come to $25,000 or less for each tax period, you can file a small case request: a short letter identifying the changes you disagree with and why. Above $25,000 for any period, you need a formal written protest.7Internal Revenue Service. Appeals Process
A formal protest has to include:
- Your name, address, daytime phone number, and the tax periods at issue
- A list of each proposed change you’re contesting, with your reasons
- The facts and any legal authority supporting your position
- A copy of Letter 950 and the examination report
- A signed declaration under penalties of perjury that the statements are true, correct, and complete
If a tax professional writes the protest for you, they add their own perjury declaration.7Internal Revenue Service. Appeals Process
What Happens at an Appeals Conference
Appeals is independent of the examination division. An Appeals Officer looks at the file fresh and weighs both sides against a practical question: if this case went to Tax Court, who would win? That framing gives the officer authority to settle in ways the examiner wouldn’t consider, including percentage splits. If half your residency proof is solid and the other half is thin, the officer can sustain part of the adjustment and reverse the rest.
Bring any new evidence you’ve gathered since the examination. Appeals is not limited to what you originally submitted. If you reach agreement, you sign a closing agreement finalizing the adjusted liability.
The 90-Day Letter and Tax Court
If appeals doesn’t resolve the dispute, the IRS issues a Statutory Notice of Deficiency, called a 90-day letter. This is the last checkpoint before assessment. You have exactly 90 days from the mailing date to petition the United States Tax Court, or 150 days if the notice is addressed to someone outside the United States.8United States Tax Court. Guidance for Petitioners: Starting A Case The Tax Court cannot extend this deadline for any reason.
Tax Court lets you contest the deficiency without paying it first. The alternative, paying in full and suing for a refund in U.S. District Court or the Court of Federal Claims, requires the cash up front. For most EITC and CTC disputes, Tax Court is the practical route. Cases involving $50,000 or less per year qualify for the court’s small tax case procedure, which is faster and less formal.
Penalties Added to the Tax
When credits are disallowed or income is increased, the underpayment often carries penalties on top. The accuracy-related penalty adds 20% of the underpayment attributable to negligence or a substantial understatement of income tax.9Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments A substantial understatement generally means the amount understated exceeds the greater of 10% of the correct tax or $5,000.
If any portion of the underpayment is due to fraud, the penalty on that portion is 75%.10Internal Revenue Service. 20.1.5 Return Related Penalties The fraud penalty is rare in routine EITC audits, but interest runs on the combined tax and penalty amount, so it compounds quickly when it applies.
Credit Bans and Form 8862
Losing an EITC, CTC, ACTC, or American Opportunity Tax Credit in an audit can cost you future years too. The IRS can impose:
- A two-year ban, if it determines you claimed the credit with reckless or intentional disregard of the rules
- A ten-year ban, if it determines the claim was fraudulent
The ban applies across all five affected credits (EITC, CTC, ACTC, Credit for Other Dependents, and AOTC), not just the one that was disallowed.11Internal Revenue Service. What to Do If We Deny Your Claim for a Credit
Even without a ban, once any of these credits has been reduced or disallowed for a reason other than math error, you must file Form 8862 the next time you claim it. Form 8862 walks you through re-establishing eligibility. Skip it and the IRS automatically rejects the credit.12Internal Revenue Service. Instructions for Form 8862 Information To Claim Certain Credits After Disallowance You can also use Form 8862 to challenge a ban you believe was imposed incorrectly, by filing it with your return for a year during the ban period when you would otherwise qualify.
Getting Someone to Handle This for You
You have the right to hire an attorney, CPA, or Enrolled Agent to represent you at every stage, from the Letter 950 response through Tax Court.13Internal Revenue Service. Taxpayer Bill of Rights To authorize a representative, file Form 2848, Power of Attorney and Declaration of Representative. That lets them inspect your tax information, sign documents, and negotiate with the IRS directly.14Internal Revenue Service. Instructions for Form 2848
Unenrolled preparers, meaning someone who prepared your return but doesn’t hold a CPA, attorney, or Enrolled Agent designation, have limited rights. They can represent you only during the examination of a return they personally prepared and signed. They cannot appear at appeals or in Tax Court. If the case is heading for a fight, upgrade.
If your income is at or below 250% of the federal poverty level, a Low Income Taxpayer Clinic can represent you before the IRS and in court at no cost. LITCs handle audits, appeals, and collection disputes, often in multiple languages.15Internal Revenue Service. Low Income Taxpayer Clinics The Taxpayer Advocate Service is a separate option when IRS action is causing financial hardship or your case has stalled; every state has at least one local office.
Check the Statute of Limitations
The IRS generally has three years from the filing of a return to assess additional tax. If you filed before the April due date, the clock starts on the due date.16Office of the Law Revision Counsel. 26 USC 6501 – Limitations on Assessment and Collection The window stretches to six years if you omitted more than 25% of your gross income. There is no time limit at all for a fraudulent return or an unfiled return.
If the tax year on Letter 950 falls outside the applicable window, that’s a real defense against the entire examination. Look up the filing date on your original return, count forward, and if the math is close, have a tax professional confirm whether the assessment period has already expired before you send anything else in.