IRS Letter 950 is a 30-day letter that arrives after an audit, telling you the changes the IRS wants to make to your return, how much more tax it believes you owe, and giving you 30 days to agree, appeal, or let the case move to the next stage. It shows up most often after examinations of refundable credits like the Earned Income Tax Credit and the Additional Child Tax Credit, because those credits produce direct refund payments the IRS wants to verify. What you do inside that 30-day window decides whether you pay the bill, fight it at Appeals, or preserve your path to Tax Court.
What the Letter and Examination Report Say
Letter 950 comes with an examination report that spells out the examiner’s findings. It identifies the tax year under review, the specific line items examined, and the dollar amount of any proposed deficiency or overassessment. The report shows how the examiner recalculated your tax, including any changes to credits, deductions, or reported income.
The date on the letter is the one that matters. You generally have 30 days from that date to respond. Miss it and the IRS treats the proposed changes as final for this stage and moves toward assessing the tax, penalties, and interest. If you need more time, call the phone number printed on the letter before the deadline and ask for an extension.
Confirm the Letter Is Real Before You Act
Tax phishing scams circulate constantly, and fake IRS notices are common enough to be worth ruling out. A genuine letter references your Social Security number (usually partially redacted), the specific tax year, and details consistent with a return you actually filed. Cross-check any phone numbers or addresses on the letter against IRS.gov. The IRS initiates contact by mail, not by email, text message, or social media.
Your Three Choices in the Next 30 Days
The letter gives you three practical paths. You can agree with the proposed changes and sign Form 870. You can disagree and request a conference with the IRS Independent Office of Appeals. Or you can do nothing, in which case the IRS will eventually issue a Statutory Notice of Deficiency (the 90-day letter), which is your ticket to United States Tax Court.
Doing nothing is not always the wrong move, but it is the one with the least control. If you know you want to fight and you want that fight in Tax Court, waiting for the 90-day letter is a valid strategy. If you want a shot at settling for less than the full deficiency, Appeals is where that happens, and Letter 950 is your entry ticket.
If You Agree With the Changes
When the examination report looks correct, close the matter by signing Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment. Signing lets the IRS immediately assess the additional tax, penalties, and interest.1Internal Revenue Service. Form 870 – Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment It also gives up your right to challenge those specific adjustments in Tax Court.
Pay as soon as you can. Interest compounds daily and runs from the original due date of the return, not from when Letter 950 arrived. For the first quarter of 2026, the IRS charged individual taxpayers 7% annual interest on unpaid balances.2Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026 That rate dropped to 6% for the second quarter.3Internal Revenue Service. Internal Revenue Bulletin: 2026-08 The rate resets every quarter.
If You Disagree: Build Your Evidence Around the Report
The examination report tells you exactly which items were disallowed or adjusted. Target those. Random documentation of everything on the return doesn’t help; documentation aimed at the disputed line items does.
Income Disputes
Pull every W-2 and 1099 you received for the year. Schedule C self-employment income needs more: bank deposit slips, invoices, credit card charge slips, Forms 1099-NEC and 1099-K, and whatever recordkeeping system you used to track receipts.4Internal Revenue Service. Recordkeeping For business expenses, gather canceled checks, account statements, and receipts showing the amount and the business purpose.
Residency for EITC and CTC
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 strongest single piece of evidence. If the child wasn’t school-age, medical records or a statement from a daycare provider work. The documents must cover more than six months of the year; one semester of school records usually isn’t enough by itself.5Internal Revenue Service. Topic No. 654, Understanding Your CP75 or CP75A Notice, Request for Supporting Documentation Supplement with utility bills, a lease, or mortgage statements bearing your name and address for the same period.
The Qualifying Child Relationship
You need to show the child is your son, daughter, stepchild, foster child, sibling, or a descendant of any of them. A birth certificate or adoption decree is the cleanest proof. If the child was 19 or older at year-end, add school transcripts showing full-time student status under age 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 Specifics
For the CTC or ACTC, the IRS needs proof the child was under 17 at year-end, lived with you for more than half the year, and is a U.S. citizen, U.S. national, or U.S. resident alien. Each qualifying child must 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 handles both age and residency.
Send copies, never originals, and organize your submission so each document ties to a specific finding in the report. Examiners handle hundreds of cases; a well-labeled package gets a more careful review than a stack of loose papers.
How to Request an Appeal
The form your appeal request takes depends on the dollar amount at stake. If the total tax, penalties, and interest for each tax period is $25,000 or less, you can file a small case request: a brief letter identifying the changes you disagree with and explaining why. Above $25,000 for any period, you need a formal written protest.7Internal Revenue Service. Appeals Process
A formal protest includes:
- Your name, address, daytime phone number, and the tax periods involved
- A statement listing each proposed change you contest and why the examiner is wrong
- 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 facts in your protest are true, correct, and complete
If a tax professional prepares the protest, they must add their own perjury declaration.7Internal Revenue Service. Appeals Process
What an Appeals Conference Actually Looks Like
The Independent Office of Appeals operates separately from the examination division. An Appeals Officer reviews the case fresh and weighs the litigation risk on both sides: if this went to Tax Court, who would likely win? That authority lets Appeals settle in ways the examiner could not, including percentage splits when part of your documentation is solid and part is weak. Bring any new evidence you’ve gathered since the exam; Appeals is not limited to what you originally submitted. If you reach an agreement, you sign a closing document that finalizes the adjusted liability.
The 90-Day Letter and Tax Court
If Appeals doesn’t resolve the dispute (or if you skip Appeals entirely by not responding to Letter 950), the IRS issues a Statutory Notice of Deficiency, the 90-day letter. You have exactly 90 days from the mailing date on that notice to file a petition with 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 that deadline for any reason.
Tax Court lets you challenge the deficiency without paying it first. That matters, because the alternative (paying in full and suing for a refund elsewhere) requires the cash upfront. Cases involving $50,000 or less per year qualify for the court’s small tax case procedure, which is faster and less formal.
Penalties on Top of the Tax
Disallowed credits and added income typically bring penalties. 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 the IRS finds any portion of the underpayment was due to fraud, the penalty on that portion jumps to 75%.10Internal Revenue Service. 20.1.5 Return Related Penalties Both penalties sit on top of the tax, and interest runs on the combined amount.
Credit Bans and Form 8862 for Future Years
Losing an EITC, CTC, ACTC, Credit for Other Dependents, or American Opportunity Tax Credit in an audit can cost you more than one year’s refund. The IRS can bar you from claiming these credits going forward:
- A two-year ban if the IRS determined you claimed a credit with reckless or intentional disregard of the rules
- A ten-year ban if the IRS determined the claim was fraudulent
The ban applies across all five credits listed above, not only the one that was disallowed.11Internal Revenue Service. What to Do If We Deny Your Claim for a Credit
Even without a ban, once one of these credits is reduced or disallowed for any reason other than a math error, you must file Form 8862 the next time you claim it. Form 8862 makes you re-establish eligibility by answering questions on the qualifying child, relationship, residency, and income. Leave it off and the IRS will reject the credit automatically.12Internal Revenue Service. Instructions for Form 8862 Information To Claim Certain Credits After Disallowance If you believe a ban was imposed incorrectly, you can challenge it by filing Form 8862 for a year within the ban period when you would otherwise qualify.
Getting a Representative
An attorney, CPA, or Enrolled Agent can represent you from the Letter 950 response all the way through Tax Court. File Form 2848, Power of Attorney and Declaration of Representative, to authorize them to inspect your tax information, sign documents, and negotiate directly with the IRS on your behalf.13Internal Revenue Service. Instructions for Form 2848
An unenrolled return preparer, meaning someone who prepared your return but doesn’t hold one of those three credentials, can represent you only during the examination of a return they personally prepared and signed. They cannot represent you at Appeals or in Tax Court. If the case is heading toward a fight, moving to a credentialed representative is worth doing before Appeals, not after.
If your income is below 250% of the federal poverty level, a Low Income Taxpayer Clinic can represent you before the IRS or in court at no charge. LITCs handle audits, appeals, and collection disputes, and many work in multiple languages.14Internal Revenue Service. Low Income Taxpayer Clinics IRS Publication 4134 lists the clinics, and the directory is on IRS.gov.
Check Whether the IRS Ran Out of Time
The IRS generally must assess additional tax within three years after a return was filed. If you filed before the April due date, the clock starts on the due date.15Office of the Law Revision Counsel. 26 USC 6501 – Limitations on Assessment and Collection The window extends to six years if you omitted more than 25% of 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 is a legitimate basis to challenge the entire examination. Pull the filing date on the original return and count forward. When the math is close, a tax professional can tell you whether the assessment period has already expired.