Tax Resolution for Startups
Got an IRS or State Tax Notice? Start With the Deadline.
Got an IRS notice? Do not ignore the deadline on it, and do not pay or argue before you know what it says. Most startup notices are fixable with a clear written response, a penalty relief request or a payment plan, and an Enrolled Agent can handle the IRS for you.
Tax resolution is the work of getting a tax account back to a settled state: answering the notice, correcting what is wrong, asking for penalty relief where the facts support it, filing anything missing, and agreeing how any real balance gets paid. We do it for startups and their founders, for existing clients and as a one-time project. We will be calm and specific with you about what is likely and what is not. If someone promises to make a penalty disappear or settle your debt for a fraction before seeing your transcripts, be careful: nobody can know that in advance.
What to Do in the First 48 Hours
Six steps that protect your options, whatever the notice says.
- 1
Find the deadline
Look for the response date printed on the notice and write it down. Many notices give 30 days or less, and some rights, like a Collection Due Process hearing, are lost if the window closes.
- 2
Identify the notice
The notice number is usually in the top or bottom right corner (CP2000, CP504, LT11, and so on). It tells you which IRS function sent it and what it wants.
- 3
Confirm it is real
The IRS generally starts contact by mail, not by text, social media or a demand for gift cards. Check the notice number on irs.gov, and call only the number printed on the letter or listed on irs.gov.
- 4
Do not pay or argue yet
Do not pay a proposed amount you have not checked, and do not call in without the return and records in front of you. A short delay to understand the notice costs less than agreeing to the wrong number.
- 5
Gather the return and records
Pull the return for the year in question, the 1099s, W-2s, payroll reports or bank records the notice refers to, and any earlier letters about the same issue.
- 6
Get help before the deadline
Send us the notice. We tell you what it means, how urgent it is, and what a response would cost.
Common IRS Notices Startups Receive
The notice number tells you most of what you need to know. Always go by the dates printed on your own notice.
| Notice | What it means | Urgency and deadline |
|---|---|---|
| CP2000 | Proposed changes because income reported to the IRS by employers, banks or platforms does not match your return. | Respond by the date on the notice. Not a bill, but it becomes one if ignored. |
| CP14 | First balance-due notice: you owe unpaid tax, with penalties and interest. | Pay, set up a plan, or dispute. Interest keeps running. |
| CP501 / CP503 | First and second reminders that a balance is still unpaid. A CP503 warns that a federal tax lien may be filed. | Escalating. Address before the next notice arrives. |
| CP504 | Notice of intent to levy. The IRS can take a state tax refund and begin searching for other assets to levy. | Serious. Act now to arrange payment or dispute. |
| LT11 / Letter 1058 | Final notice of intent to levy, with your right to a Collection Due Process (CDP) hearing. | 30 days from receipt to request a CDP hearing (Form 12153). Wages and bank accounts are at risk. |
| CP2100 / CP2100A | B-notice: 1099s you filed have payee names or TINs that are missing or do not match IRS records. | Send B notices to payees; start backup withholding within 30 business days if they do not respond. |
| Penalty notices (5472, 5471, 1120) | Late-filing penalties on a corporate return or international information return, including the $25,000 Form 5472 penalty. | Check the notice for appeal and response dates; penalty relief requests are strongest when made promptly. |
Foreign-owned companies and founders with non-US entities see the Form 5472 and 5471 penalties most often. Our Form 5472 guide explains who has to file, and our cross-border tax service handles the cross-border filings behind many of these penalties.
What Tax Resolution Covers
IRS and state tax notices for startups and their founders, from a single letter to several years of catch-up.
- Reading and triaging the notice: what it means, which IRS or state function sent it, and the real deadline
- Form 2848 power of attorney and IRS account transcripts, so we work from the IRS record, not guesses
- The written response, with supporting schedules and documents
- Penalty relief requests: first-time abatement and reasonable cause, including late-filing and Form 5472 penalties
- Back-year federal and state returns to get you compliant again
- Payment plans (installment agreements), and currently-not-collectible status or offers in compromise where they genuinely fit
- Requests to hold or release liens and levies while a resolution is worked out
- Payroll tax (Form 941) problems: missed deposits, unfiled quarters and the penalties that follow
- State agency notices, such as the California FTB, New York and Massachusetts
- Audit and examination representation before the IRS
What we do not do
- Criminal tax investigations, summonses and US Tax Court litigation, which we refer to a tax attorney
- Promises of penalty removal, settlement amounts or any particular outcome
Penalty relief, honestly
First-time abatement can remove failure-to-file, failure-to-pay and failure-to-deposit penalties when the same type of return was filed on time for the prior three years and there were no penalties in that period. It generally does not cover information-return penalties such as Form 5472. Reasonable cause relief depends on the facts: events like a serious illness, a disaster, or records you could not obtain can qualify, while simply not knowing the rule or relying on a preparer usually does not on its own. We tell you which applies before you pay for a request.
How It Works
Review
Send us the notice and the return it concerns. We tell you what it means, how urgent it is, and what we would do, before you commit to anything.
Authorization
You sign Form 2848 so we can act for you with the IRS, plus any state power of attorney the agency uses.
Transcripts
We pull your IRS account transcripts to see every assessment, penalty, payment and notice on file. This is often where the real picture shows up.
Response or plan
We file the response, penalty relief request, missing returns or payment plan request, and handle the follow-up calls and letters.
Close-out and prevention
We confirm the account shows the agreed result, then fix what caused the notice: missed deadlines, books that were behind, or payroll deposits off schedule.
Books that are months behind are one of the most common root causes of notices and missed filings. If that is you, pair this with catch-up bookkeeping, and use our tax compliance tool and 2027 startup tax deadlines to stay ahead of the next one.
How Pricing Works
Every matter is different, so we quote it after we see the notice. Call us for a quote.
Notice response
IRS and state notices, quoted once we read the letter.
Back-year returns
Federal and state returns for missed years, quoted by the years and returns involved.
B-notice (CP2100)
Handling a CP2100 or CP2100A notice of mismatched payee names or TINs.
Amended returns
When an original return needs to be corrected.
How billing works
Audits, offers in compromise and larger collection cases are quoted after we review your IRS transcripts, because the right path depends on what is actually on the account. Every item gets a written quote first. 50% is due when the Master Service Agreement and Statement of Work are signed and 50% on completion, and if the work changes (more tax years, returns or forms), we quote the additional fees by email and bill them on a subsequent invoice once you approve; see our terms. Tax resolution is available to existing clients and as a one-time project. Every StartupCFO plan also includes a 50% discount on preparation of 1 federal + 1 state return, which keeps next year on time. Plans start with Launch at $199/mo for bookkeeping; see pricing for Foundation and Growth.
Who Handles Your Case
Nitasha Ahuja, EA
Partner, Tax Resolution & IRS Representation
An Enrolled Agent, federally authorized to represent taxpayers before the IRS, with more than 15 years inside the IRS across the Taxpayer Advocate Service, Examination and Accounts Management. She holds an MSL in Taxation from Georgetown University Law Center and leads notices, audits, collection alternatives and penalty abatement at StartupCFO.
Aparna Devalla, CPA
Head of Tax & Accounting
A Certified Public Accountant who leads the tax and accounting practice, including multi-state income and sales tax compliance, Delaware franchise tax and corporate returns. She prepares the back-year and amended returns a resolution often needs.
Frequently Asked Questions
We got a $25,000 penalty for a late Form 5472. Can it be removed?
Sometimes, and nobody can promise it. The IRS assesses a $25,000 penalty when a reporting corporation, often a foreign-owned US company or a single-member LLC owned by a non-US founder, files Form 5472 late or not at all. First-time abatement generally does not reach information-return penalties like this one, so the usual path is a reasonable cause request: a written account, with documents, of why the filing was missed and what you did once you found out. Good facts and a prompt, complete filing help a great deal. We read the notice and your transcript, tell you honestly how strong the case looks, and prepare the request and any missing filings. If the request is denied, appeal rights usually remain, and we explain them.
What does a CP2000 mean?
A CP2000 means the IRS matched information from employers, banks, brokers or payment platforms against your return and found income or payments that do not line up. It proposes changes to your tax; it is not a bill and it is not a full audit. You respond by the date printed on the notice, either agreeing or disagreeing with documents. Many CP2000s are partly or fully wrong, for example when a 1099 was reported on a different line or the cost basis of stock sales was missing. We reconcile the IRS figures to your records and write the response.
Can you talk to the IRS for me?
Yes. Nitasha Ahuja is an Enrolled Agent, a credential that federally authorizes her to represent taxpayers before the IRS. Once you sign Form 2848 (power of attorney), she can pull your transcripts, call the IRS, respond to letters and attend meetings on your behalf, so you are not the one on hold. For state agencies, representation rules vary by agency; we confirm what each one accepts and tell you up front.
Can we set up a payment plan for payroll taxes?
Often, yes, but payroll tax debt is treated more seriously than most balances because it includes money withheld from employees. The IRS lists a simplified payment plan for businesses with trust fund (payroll) taxes when the assessed balance is $25,000 or less; larger balances usually need a financial statement and a negotiated agreement. Unpaid withheld taxes can also be assessed personally against the people responsible for paying them, so it pays to act early. We get current deposits back on track first, because the IRS generally expects that before it will agree to a plan.
Do you handle state tax notices?
Yes. Startups regularly receive notices from agencies such as the California Franchise Tax Board, New York State, and the Massachusetts Department of Revenue, often for a missed return, a franchise or minimum tax, or a mismatch with the federal return. We read the notice, check the account, and prepare the response or the missing filings. Whether we can speak to a given state agency directly depends on that agency's own rules; where it requires a different credential, we tell you and coordinate.
Do you handle criminal tax matters?
No. If you are contacted by IRS Criminal Investigation, receive a summons, or have a matter headed to the US Tax Court, you need a tax attorney, and we will tell you so plainly and refer you. Conversations with an attorney can carry legal privilege that conversations with us do not. We are glad to work alongside your attorney on the numbers once they are engaged.
Can you settle our tax debt for less than we owe?
Only sometimes, and less often than advertising suggests. An offer in compromise can settle a balance for less than the full amount, but the IRS generally will not accept one if the debt can be paid through a payment plan or from available equity. For most startups and founders, an installment agreement, penalty relief, or in hardship cases currently-not-collectible status is the realistic outcome. We review your transcripts and finances before suggesting any of them, and we quote offers in compromise only after that review.
How much does tax resolution cost?
Every matter is quoted after we see the notice, so call us for a quote. Simple notice responses, B-notices and amended returns are quoted once we read the letter; back-year returns are quoted by the number of years and returns involved; audits, offers in compromise and larger collection cases are quoted after we review your IRS transcripts. Every item gets a written quote: 50% is due when the MSA and Statement of Work are signed and 50% on completion, and if the work changes, additional fees are quoted by email and billed on a subsequent invoice once approved.
Have a Notice on Your Desk?
Book a call and send the notice. We will tell you what it means, how much time you really have, and what a response would cost, with no promises we cannot keep.
Keep learning
Startup tax and compliance
Federal and state filings, R&D credits, and multi-state nexus tracking.
Free toolTax Compliance Calendar (2026 & 2027)
Federal, state, franchise, and local 2026 filing deadlines.
GuideMulti-State Tax Compliance
Navigate the complexities of multi-state tax obligations as your startup hires remote employees and sells across state lines.
InsightAustin Startup Tax Deadlines 2027: Texas Franchise Tax Calendar
Texas has no personal or corporate income tax, but Austin startup taxes are not zero. Here is the 2027 calendar for founders: the May franchise tax report, the Public Information Report, sales tax on SaaS, the new refundable R&D credit, Travis County property renditions, and the federal and Delaware dates layered on top.
GuideCommon Financial Mistakes First-Time Founders Make
Avoid the most common financial missteps that first-time founders make, from commingling funds and missing tax deadlines to skipping the 83(b) election.
InsightBoston Startup Tax Deadlines 2027: Massachusetts Calendar
Boston startup taxes run mostly through the state: the Massachusetts corporate excise with its $456 minimum, sales tax on SaaS, PFML contributions, and the 4% millionaire surtax that hits founders at exit. Here is the full 2027 calendar for a Delaware C-corp in Massachusetts.
