8 Common IRS Notices for Online Sellers in 2025

Common IRS Notices for Online Sellers in 2025 are becoming more frequent as tax enforcement continues to tighten around digital commerce. With the rise in 1099-K reporting and new tax thresholds, many US-based online sellers are receiving letters they’ve never seen before. The good news? With proper bookkeeping and the support of trusted accounting services in the US, these notices are manageable and often easy to resolve.

This guide breaks down the most common IRS notices, why they happen, and how you can stay ahead of them.

Here are the IRS notices online sellers are most likely to receive in 2025:

1. CP2000 – Reported Income Doesn’t Match IRS Records

• Triggered when your filed income doesn’t match what the IRS receives from third-party platforms.
• Action: Cross-check the notice with your records and respond with supporting documentation or corrections.

2. CP501 / CP502 / CP504 – Balance Due Notices

• A sequence of reminders about unpaid taxes. CP504 includes a final warning before enforced collections.
• Action: Pay the balance, set up a payment plan, or dispute if incorrect.

3. CP12 – Refund Adjustment

• Issued when the IRS corrects a mistake and adjusts your refund.
• Action: Review the adjustment; if you disagree, you can respond or request clarification.

4. CP180 / CP181 – Missing Tax Forms

• Indicates your return is missing a required form, such as a Schedule C.
• Action: Submit the missing documents to prevent delays or further notices.

5. CP521 – Installment Agreement Payment Due

• A payment reminder for your tax installment plan.
• Action: Make the payment on time or contact the IRS if you need adjustments.

✅ Counto’s all-inclusive accounting plans for online sellers feature multicurrency support, unlimited transactions, GST submissions, and tax filing—with no hidden fees. Benefit from a dedicated team of experts, including a bookkeeper, Chartered Accountant, and tax specialist. Optimise your e-commerce finances today.

6. Letter 3172 – Notice of Federal Tax Lien

• Warns that the IRS has placed a lien on your property for unpaid taxes.
• Action: Pay off the balance or negotiate resolution options to protect your assets.

7. Letter 3219B – Notice of Deficiency

• Alerts you of the IRS’s intent to assess additional tax unless you respond.
• Action: Respond before the deadline with any disputes or pay the proposed balance.

8. CP44 – Refund Held for Review

• Your refund is under review, often due to identity verification or mismatched reporting.
• Action: Submit any requested documents to speed up the review process.

Why Online Sellers Receive IRS Notices

Online sellers often receive IRS notices due to discrepancies between what’s reported on their tax return and what’s reported by third-party platforms. Key reasons include:

• 1099-K forms reporting total gross payments, including:

  • Shipping charges

  • Sales tax collected

  • Refunded transactions

• Mismatched income when these amounts aren’t broken down clearly in your tax return

• Missing schedules for self-employment income (e.g., Schedule C)

• Estimated taxes not paid or installment payments missed

Keeping detailed, up-to-date records helps prevent miscommunication and ensures your returns are complete and accurate.

How Accounting Services Can Help Online Sellers

Accounting services in the US play a key role in helping online sellers avoid and respond to IRS notices. Here’s how:

• Catch Discrepancies Early

  • Ensure that income reported on 1099-K forms aligns with your actual business earnings.

• Respond Confidently to Notices

  • Professional accountants can help you interpret and respond to IRS letters without missing deadlines.

• Maximize Deductions and Track Expenses

  • Proper categorization of shipping, software, ads, and returns can reduce your taxable income and avoid overreporting.

• Stay Ahead of Tax Rule Changes

  • Ecommerce tax laws evolve quickly; expert guidance helps you remain compliant throughout the year.

• Be Audit-Ready

  • Clean records and professionally prepared returns mean you’re prepared in case of an audit or review.

Summary

Knowing how to handle the Common IRS Notices for Online Sellers in 2025 is part of running a successful ecommerce business. Most notices are triggered by reporting mismatches, missing forms, or unpaid balances—and they can often be resolved without penalties if you act quickly. Solid bookkeeping and the help of reliable accounting services in the US will keep you ahead of any issues, so you can focus on growing your business, not untangling tax notices.

Discover how Counto helps online sellers like you save time and money

With an intelligent platform combined with experienced accountants and tax specialists, who are dedicated to helping online businesses achieve greater financial efficiency at an affordable price. Experience a smarter way to outsource your ecommerce accounting with confidence. Speak to us directly on our chatbot, email [email protected], or use our contact form. to get started.