IRS and CRA Correspondence: What Expat Filers Need to Know

Filing a U.S. return as an American abroad — or a Canadian return as a cross-border filer — is inherently more complex than a standard domestic return. More forms, more information sources, more jurisdictions, and more data points create more opportunities for the IRS or CRA to send a letter.

A few reasons this happens more frequently for expat filers:

Information reporting discrepancies. The IRS receives information returns from banks, brokerages, employers, and foreign financial institutions. When the information on your return doesn’t match what the IRS received — even due to timing differences, currency conversions, or how certain income is categorized — a matching notice can be generated automatically.

Foreign account and asset reporting. FBAR filings, Form 8938, and other information returns create additional touchpoints with the IRS. Discrepancies between these filings and your return, or questions about foreign account balances, can trigger follow-up.

Amended returns and compliance filings. Expats who have caught up on prior year returns through the Streamlined program or other compliance procedures may receive correspondence related to those submissions, particularly if questions arise about the treatment of income or deductions in prior years.

CRA cross-referencing. For cross-border filers, the CRA and IRS share information under the Canada-U.S. Tax Treaty. Discrepancies between what you reported to each authority can surface on either side of the border.

Processing delays and confirmation requests. The IRS in particular has faced significant processing backlogs in recent years. Letters requesting additional information, confirming receipt of payments, or asking for documentation to support credits or deductions are common even when nothing is wrong with your return.

None of this means something has gone wrong. Most correspondence is routine and resolvable. But it does require attention

Not all IRS or CRA letters are created equal. Understanding what you’re looking at is the first step to responding appropriately.

Processing notices These are the most common and least urgent. They confirm receipt of your return, notify you of a payment applied to your account, or provide a processing update. Most require no action unless specifically stated. Examples include CP88 (delinquent return reminder) and various acknowledgement letters.

CP2000 / CRA matching notices These are automatically generated when information reported on your return doesn’t match information the IRS or CRA received from a third party — a bank, employer, or investment institution. The notice proposes an adjustment to your tax and asks you to agree or disagree. These require a careful response — agreeing when you shouldn’t, or failing to respond within the deadline, can result in an assessment.

Transcript requests and verification letters These ask you to verify your identity, confirm information on your return, or provide documentation supporting a credit or deduction. They require a timely response with appropriate documentation.

Balance due notices These notify you that the IRS or CRA believes you owe tax, penalties, or interest. They require careful review — the balance due is sometimes incorrect, and responding with the right documentation can eliminate or reduce the amount owed.

Audit notices Formal audit notices — whether correspondence audits conducted by mail or examination audits conducted in person — are less common but require the most attention. The IRS will specify which items on your return are under examination and request documentation. For expat filers, audits most often relate to foreign tax credits, foreign income exclusions, or information returns.

The single most important thing to do when you receive a notice from the IRS or CRA is to read it carefully before taking any action — and to contact your Tax Specialist before responding.

Don’t ignore it. Every IRS and CRA notice has a response deadline. Missing the deadline can result in automatic assessments, additional penalties, or loss of your right to dispute the proposed adjustment. Even if you believe the notice is incorrect, you need to respond.

Don’t automatically agree. Many notices propose adjustments that are incorrect. Agreeing to an incorrect CP2000 or balance due notice can result in you paying tax you don’t owe — and reversing an agreed assessment is significantly harder than disputing the original notice.

Don’t call the IRS or CRA without reviewing your return first. Phone contact with either agency is recorded and can have implications for how your case is handled. If you call without understanding the issue, you may inadvertently provide information that complicates your situation.

Do contact AET first. If you have a Value Add Bundle, correspondence handling is included — bring the notice to us before you respond or take any action. If you don’t have a bundle, a consultation is available to help you understand what you’re looking at and what response is required.

The relationship between you and your Tax Specialist doesn’t end when your return is filed. For many expat filers, questions and correspondence arise in the months or years following filing — and having a specialist available to handle them makes a significant difference.

AET’s post-filing support is structured through Value Add Bundles — three tiers of coverage (Basics, Supplemental, and Full Care) that determine how much support is available after your return is delivered. Coverage ranges from handling routine processing letters to full audit representation.

All engagements include the Basics bundle automatically. You can upgrade or opt out at any time.

For full details on what each bundle covers and current pricing, see our