IRS Letter 324c - What Does It Mean and How to Respond?

Don't panic! LTR 324c (also called CP324) is a pretty common IRS notice that just means they need additional information to process your return. It's not an audit or indication that you did anything wrong. Based on what you've described, the IRS is likely having trouble matching the income you reported with what they have in their systems. This happens often with side gig income. Do you have any 1099 forms from the people you did work for? Or payment records if they didn't issue a 1099? The IRS is basically asking you to substantiate that income. You'll need to respond with documentation showing the income you earned. This could include bank statements showing deposits, invoices you created, payment app records (Venmo, PayPal, etc.), or contracts for the work. Also include a copy of the letter with your response and keep copies of everything you send.

I went through something similar last year with a CP324 notice questioning my freelance income. I spent HOURS trying to get someone on the phone at the IRS but kept getting disconnected or told to call back later. Then I found this service called taxr.ai (https://taxr.ai) that analyzed my letter and helped me figure out exactly what documentation I needed to send. They have this really cool AI system that can read your IRS notices and give you plain English explanations about what the IRS is actually asking for. It saved me from sending the wrong stuff and potentially delaying my refund even more. The tool also helped me draft a response letter to include with my documentation.

Just wanted to update that I tried taxr.ai after seeing it mentioned here. I had a different notice (CP2000) and was totally confused about what they wanted from me. The tool scanned my notice and immediately explained that the IRS was questioning a retirement distribution I forgot to report. It even showed me the exact line on my tax return where the issue was! The best part was it gave me a checklist of documents to gather and a template letter to send with my response. Super helpful when you're stressed about dealing with the IRS. My situation is resolved now and I got the partial refund I was expecting.

When I got my LTR 324c last year, I tried calling the IRS about a dozen times for clarification. Complete nightmare - hours on hold only to get disconnected. I finally used this service called Claimyr (https://claimyr.com) that basically holds your place in the IRS phone queue and calls you when an agent is about to pick up. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c It saved me from wasting an entire day on hold. When I finally got through to an agent, they explained exactly what documentation they needed and even gave me a direct fax number to send it to, which got my issue resolved way faster than mailing everything.

OK I have to admit I was wrong about Claimyr. After getting a CP2000 notice last week and spending 4 hours on hold just to get disconnected, I decided to try it out of desperation. The service called me back after about 2 hours and connected me with an IRS agent immediately. The agent explained that there was actually a mistake on their end - they hadn't properly recorded a 1099-R form that I had correctly reported on my return. She put notes in my file and told me exactly what to write in my response letter. She also gave me a direct fax number to send my documentation, which should resolve everything much faster than standard mail. Saved me so much stress and potentially saved my refund too. Sometimes it's worth getting actual help from a human at the IRS rather than trying to interpret their cryptic letters.

For your LTR 324c, make sure you're super clear in your response about where the income came from. My wife got a similar letter because she did some contract work but the company filed the 1099 with her maiden name while she filed taxes with her married name. Even though the SSN matched, it triggered the letter. We sent copies of the 1099, bank statements showing the deposits, and a brief explanation of the name discrepancy. Got our refund about 6 weeks later without any further issues. The key is being thorough in your response and addressing exactly what they're questioning.

Anyone know how long it typically takes the IRS to process your response to a LTR 324c? I sent mine in about 5 weeks ago and haven't heard anything back. Still waiting on my refund...

I dealt with a LTR 324c about 8 months ago for similar reasons - side income that wasn't matching their records. The key thing is to respond quickly and be very organized with your documentation. Here's what worked for me: I created a simple cover letter that referenced the notice number and date, then listed each document I was including (PayPal statements, bank deposits, emails from clients, etc.). I organized everything chronologically and highlighted the relevant amounts that matched what I reported on my return. Since you mentioned you have PayPal records and emails, that should be perfect. Just make sure the amounts are clearly visible and add up to the $6,700 you reported. I also included a brief explanation of the work I did to give context. One tip: make copies of EVERYTHING before you send it, and use certified mail with return receipt. The IRS can be slow to process, but having that tracking gives you peace of mind. Mine took about 6 weeks to resolve, but I got my full refund without any adjustments. Don't stress too much - this is really just a paperwork exercise to verify your income. You reported it correctly, now you just need to prove it to them!

I had a very similar experience with LTR 324c last year! Got mine for freelance writing income that didn't match their records. The panic is totally understandable but you're going to be fine. Since you filed through TurboTax and have PayPal records plus emails, you're in good shape. Here's exactly what I did that worked: 1. Created a simple cover letter addressing the specific notice (reference the letter date and notice number) 2. Listed each piece of documentation I was including 3. Organized everything chronologically - PayPal statements, bank deposits showing the payments, any contracts or emails confirming the work 4. Made sure the total amounts were clearly highlighted and matched what I reported ($6,700 in your case) The IRS just wants to see that the income you reported actually exists and came from legitimate sources. Your PayPal records are perfect for this - they show the payments, dates, and sources. Don't forget to make copies of everything before mailing, and definitely send via certified mail. The address should be on your notice. It took about 7 weeks for mine to process, but I got my full refund without any issues. You've got this! It's just paperwork verification, not an audit or indication you did anything wrong.

I went through the exact same thing about 6 months ago with my LTR 324c! The anxiety is totally normal but you're going to be fine. The IRS just needs to verify that the income you reported actually exists - it's not personal and definitely not an audit. Since you have PayPal records and email confirmations, you're in really good shape. Here's what I'd recommend based on my experience: 1. Print out all your PayPal transaction records showing the $6,700 in payments 2. Include any emails or messages from clients confirming the work and payment amounts 3. If you have bank statements showing those PayPal deposits, include those too 4. Write a brief cover letter explaining what the documents are and how they support the income you reported Make sure to reference the letter date and notice number in your response. Keep it simple and factual - something like "Enclosed are PayPal transaction records and client communications supporting the $6,700 in freelance income reported on my 2024 tax return." The mailing address should be on your notice, usually on the second page. Send everything certified mail so you have proof of delivery. Mine took about 6-7 weeks to process, but I got my full refund without any adjustments. Don't panic about the 30-day deadline - as long as you respond within that timeframe, you'll be fine. The IRS just wants to match their records with what you filed. You did nothing wrong!

I just want to echo what everyone else has said - you're definitely going to be okay! I got a LTR 324c about 18 months ago for some 1099 work that wasn't showing up in their system correctly, and the whole process was way less scary than I initially thought. The fact that you have PayPal records and client emails puts you in a really strong position. Those are exactly the types of documents the IRS is looking for to verify your income. When I responded to mine, I organized everything like others have mentioned - chronological order with a cover letter explaining what I was sending. One thing I'd add that really helped me: I created a simple spreadsheet showing each payment (date, client, amount) and included that as the first page of my documentation packet. It gave the reviewer an instant overview before they dug into all the individual PayPal screenshots and emails. Made it super clear that everything totaled to exactly what I had reported. The 30-day response window might feel tight, but you have plenty of time to gather your documents and put together a clear response. Just stay organized, send it certified mail, and try not to stress too much while you wait for them to process it. In my case, it took about 7 weeks but I got my full refund with no issues. You reported your income honestly and have the documentation to prove it - that's really all they're looking for. This is just a matching exercise on their end, not a judgment on your tax filing!

I can really relate to your situation! I received a LTR 324c about 10 months ago for freelance consulting work, and like you, I was completely panicked at first. The good news is that this is a very routine correspondence verification - not an audit or penalty notice. Since you have PayPal records and email confirmations, you're actually in excellent shape. Here's what worked for me: 1. **Create a clear cover letter** - Reference the notice number and date, briefly explain that you're providing documentation to verify the $6,700 in side gig income you reported 2. **Organize chronologically** - Print your PayPal transaction history (use their export feature for the cleanest format) and arrange by payment date 3. **Include supporting emails** - Any correspondence with clients about work completed and payments 4. **Add a summary page** - I made a simple table showing Date | Client/Source | Amount, with a total at the bottom matching your reported $6,700 5. **Highlight key information** - Use a yellow highlighter to mark the payment amounts so they're easy to spot The address for mailing should be printed on your notice (usually page 2). Send everything via certified mail and keep copies of everything. In my case, it took about 6 weeks to process, but I received my full refund without any adjustments. Don't worry about the 30-day deadline - you have plenty of time to get this together. The IRS just needs to match their records with what you filed, and you clearly have the documentation to prove your income. You've got this!

I completely understand that panic feeling - I went through the exact same thing with a LTR 324c about a year ago! The good news is this is really just a documentation request, not an indication that you did anything wrong. Your PayPal records and client emails are perfect for this situation. Here's what I'd recommend based on my experience: **Organize your response packet:** 1. Cover letter referencing the notice number and date 2. Summary sheet listing each payment (date, client, amount) totaling to your $6,700 3. PayPal transaction export (they have a download feature under Activity) 4. Client emails confirming work and payments 5. Copy of the original LTR 324c **Pro tips:** - Highlight payment amounts in your PayPal records so they're easy to spot - Organize everything chronologically by payment received date - Make copies of everything before mailing - Send via certified mail to the address listed on your notice The whole process took about 6-7 weeks for me, but I got my full refund without any issues. The 30-day response window gives you plenty of time to gather everything properly. You reported your income correctly and have the documentation to prove it - that's all they need to see. Try not to stress too much about this. It's really just a matching exercise on their end!

I went through this exact situation about 8 months ago and totally understand that initial panic! LTR 324c notices are actually pretty routine - the IRS just needs to verify income when their automated systems can't match what you reported with what's in their database. Since you have PayPal records and client emails for your $6,700 in side gig income, you're in great shape. Here's what worked for me: **Essential documents to include:** - PayPal transaction history (use their export feature under "Activity" for a clean PDF) - Bank statements showing the PayPal deposits - Client emails confirming work and payment amounts - A simple summary sheet listing each payment with dates and amounts totaling $6,700 **Response tips:** - Write a brief cover letter referencing your notice number and date - Organize everything chronologically by payment date - Highlight the key payment amounts so they're easy to spot - Send via certified mail to the address on your notice (usually page 2) The whole process took about 7 weeks for me, but I got my full refund without any adjustments. The 30-day deadline might feel tight, but you have plenty of time to gather your documentation properly. Don't stress - you reported everything correctly and have proof. This is just the IRS doing their due diligence to match records. You've got this!