Confused by a Letter from the IRS? You’re Not Alone – and It’s Not (Just) You

More and more Americans living abroad are suddenly receiving letters from the IRS. Sometimes it’s about an outstanding amount (“Notice CP14”), a supposed mistake in a previous tax return (“Letter 525”), or a request for additional information. But what do these letters actually mean? And why do they seem so unexpected?

For U.S. expats, these notices often cause confusion—or even panic. The content is vague, often doesn’t reflect their actual tax situation, and raises more questions than it answers. Unfortunately, this is no coincidence.

IRS Severely Understaffed

The U.S. Internal Revenue Service has been dealing with staffing shortages for years. In 2025, the situation has worsened due to new rounds of budget cuts. As a result, phone wait times are extremely long, many departments are understaffed, and there is a serious lack of personnel with experience in international tax issues.

According to the National Taxpayer Advocate, the outlook for the 2026 filing season is alarming. Training programs have been cut back, experienced staff are leaving the agency, and fewer taxpayer calls are being answered. U.S. citizens abroad feel the impact directly: days or even weeks with no response from the IRS, unclear or incorrect letters, and payment demands that don’t take foreign circumstances into account.

Automation Over Accuracy

Due to lack of capacity, the IRS increasingly relies on automated systems. These systems often fail to detect whether someone lives abroad, whether a tax treaty applies, or whether someone has claimed a Foreign Tax Credit or similar expat-specific provision. This results in erroneous letters, double taxation, or denied deductions.

For taxpayers in the U.S., this is frustrating enough. But for Americans overseas- who deal with foreign currencies, non-U.S. employers, and complex reporting requirements such as FATCA or FBAR—- the consequences are often even more serious.

What Should You Do If You Receive an IRS Letter?

• Don’t ignore it – Many IRS notices have a response deadline of 30 days.
• Keep documentation – Save the letter, your tax returns, and all correspondence.
• Try contacting the IRS – Be prepared for long wait times and limited answers.
• Seek expert advice – Most IRS staff are not trained in the rules that apply to Americans living and working abroad.

Get informed at Americans Overseas

Have you received a letter from the IRS and are unsure what it means? Are you worried about errors in your tax return due to unclear or incorrect notices?

We, the founders of Americans Overseas, were born in the Netherlands and obtained our American nationality through our (American) mother.

When we heard about the US tax system for the first time around 2013, we were in total disbelief (it can’t be true!), anger (how can they do this?), fear (am I going to get fined or pick up other problems?), and panic (what should I do?). It is (unfortunately) true that there is an additional American tax levy. But there’s no information from the local government, and when approached, the consulate referred us to the IRS, and the IRS was impenetrable.

That’s why we started this initiative to help people from all over the world by providing proper information about the US tax system to avoid unnecessary panic and offering help free of obligation and free of charge. If needed, we have a network of affordable professionals (accountants) who can help you with your American tax obligations.

Contact us for more information

Sources IRS letter:

• IRS CP14 notice
• Letter 525 – General 30-Day Letter
• National Taxpayer Advocate issues mid-year report to Congress; highlights a successful 2025 filing season and challenges for 2026