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  • Writer's pictureRoger Reed

What To Do When Receiving IRS Letters

Updated: Sep 28, 2022

TLDR: Don't ignore it. Don't throw it away. Don't panic. Do take timely action. Do review the information. Get help if necessary.


Every year, the IRS mails thousands of letters or notices to taxpayers for many different reasons. Typically, it's about a specific issue with a taxpayer's federal tax return or tax account. A notice may tell them about changes to their account such as a proposed tax assessment, or ask for more information. It could also tell them they need to make a payment or if a refund was issued.


Since each individual case is unique, read the letter carefully or have a tax professional look at the notice to know exactly what you are dealing with.



Why was I notified by the IRS?

The IRS typically sends notices and letters for the following reasons:

  • You have a balance due.

  • You are due a larger or smaller refund.

  • We have a question about your tax return.

  • We need to verify your identity.

  • We need additional information.

  • We changed your return.

  • We need to notify you of delays in processing your return.


Next steps


Read

Each notice or letter contains a lot of valuable information, so it’s very important that you read it carefully. If you are unsure about the letter, get a tax professional to look at it to make sure you understand exactly what the IRS is telling you.


Respond

If your notice or letter requires a response by a specific deadline, there are two main reasons you’ll want to comply:

  • to minimize additional interest and penalty charges.

  • to preserve your appeal rights if you don’t agree.

Failing to respond by the specified date can have negative consequences and may further complicate your case with the IRS.


Pay

If you agree with the tax bill or the proposed assessment, pay as much as you can, even if you can’t pay the full amount you owe. If you disagree, respond to the letter promptly or seek professional help as soon as possible.


Keep a copy of your notice or letter

It’s important to keep a copy of all notices or letters with your tax records. You or your tax professional may need these documents later.


Here are some do's and don'ts for anyone who receives mail from the IRS:

  • Don't ignore it. Most IRS letters and notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do. Simply ignore it won't make it go away. Plus, the IRS don't care if you say you did not receive the notice.

  • Don't throw it away. Taxpayers should keep notices or letters they receive from the IRS. You may need to refer to them when filing your next year tax return, or if you disagree with the notices and enter into a dispute with the IRS. In general, the IRS suggests that taxpayers keep records for three years from the date they filed the tax return for individual taxpayers and seven years for business taxpayers.

  • Don't panic. The IRS and its authorized private collection agencies do send letters by mail. Most of the time, all the taxpayer needs to do is read the letter carefully and promptly take the appropriate action.

  • Do take timely action. It is very important that you take timely actions. A notice may reference changes to a taxpayer's account, taxes owed, a payment request or a specific issue on a tax return. Acting timely could minimize additional interest and penalty charges while preserving your appeal rights.

  • Do review the information. If a letter is about a changed or corrected tax return, the taxpayer should review the information and compare it with the original return. If the taxpayer agrees, they should make notes about the corrections on their personal copy of the tax return and keep it for their records.

  • Do respond to a disputed notice. If a taxpayer doesn't agree with the IRS, they should mail a letter explaining why they dispute the notice. They should mail it to the address on the contact stub included with the notice. The taxpayer should include information and documents for the IRS to review when considering the dispute.

  • Do remember there is usually no need to call the IRS. If a taxpayer must contact the IRS by phone, they should use the number in the upper right-hand corner of the notice. The taxpayer should have a copy of their tax return and letter when calling the agency.

  • Do avoid scams. The IRS will never contact a taxpayer using social media or text message. The first contact from the IRS usually comes in the mail. Taxpayers who are unsure if they owe money to the IRS can view their tax account information on IRS.gov.

If you need help navigating your tax debt issues, give us a call at (720) 712-7724 or book a FREE consultation using the link: https://calendly.com/rpfs/consult-with-ea


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