If you receive a notice from the IRS, do NOT ignore it. Far too many taxpayers do not open IRS mailings thinking the worse
Reasons IRS Sends Notices to Taxpayers
The IRS mails letters or notices to taxpayers for a variety of reasons and not all of them are “bad”. Some “good” reasons relate to refunds you are waiting to receive or a simple question the IRS has about your return. Examples include:
• You have a balance due.
• You are due a larger or smaller refund than that reflected in your return.
• The IRS needs additional information or has a question about your tax return it needs answered to continue to process your return.
• The IRS need to verify your identity. This is a precautionary step the IRS often takes before processing refunds.
• The IRS changed your tax return and is asking for your to confirm those changes.
Steps to Take if an IRS Notice is Received
• Do not ignore it – read it immediately. Most IRS letters and notices are about federal tax returns or tax accounts. The notice or letter will explain the reason for the contact and gives instructions on what to do. Not sure what you should do? Provide a copy of the notice to your tax professional and ask for guidance. Some actions required by a taxpayer are time sensitive – shoving the notice in a desk drawer and missing an IRS deadline will only make matters worse.
• Do not panic. The IRS generally contacts taxpayers by mail. Most of the time, all the taxpayer needs to do is read the letter carefully and take the appropriate action.
• Read the notice carefully and completely. If the IRS changed your tax return, the taxpayer should compare the information provided in the notice or letter with the information in their original return or ask their tax professional for guidance. The IRS does make mistakes. If the information the IRS is showing is incorrect, you need to advise the IRS by sending supporting documentation. In general, there is no need to contact the IRS if the taxpayer agrees with the notice.
• Respond timely. If the notice or letter requires a response by a specific date, taxpayers should reply in a timely manner to:
* avoid delays in processing their tax return
* minimize additional interest and penalty charges
* preserve their appeal rights if they don’t agree
• Pay amount due. Taxpayers should pay as much as they can, even if they can’t pay the full amount. You can pay online or apply online for a payment agreement, including installment agreements. If the amount owed the IRS is significant and you don’t see how you will be able to make payment, consult with an experienced tax resolution specialist.
• Keep a copy of the notice or letter. It’s important that taxpayers keep a copy of all notices or letters with other tax records. You may need these documents later.
• 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 in question and letter when calling as the IRS agent will likely request you to verify the information on your return.
Typically, taxpayers only need to contact the agency if they don’t agree with the information, if the IRS requests additional information, or if the taxpayer has a balance due. Taxpayers can also write to the agency at the address on the notice or letter. Taxpayer replies are worked on a first-come, first-served basis and will be processed based the date the IRS receives it.
Tax Tip #1
If calling the IRS, the IRS representative usually will say their name and ID badge number very quickly. Be sure to note the name of the IRS representative and his/her ID number and the date of your call. Ask the representative to spell their surname. Repeat the surname and ID number back to the representative and ask them to confirm that you have correctly noted with whom you are speaking.
Tax Tip #2
When sending supporting documentation to the IRS, do NOT send originals. Make copies and send the copies to the IRS and you should retain the original documents. Whatever you send to the IRS, be sure to maintain a copy of EVERYTHING you send.
Tax Tip #3
Carefully note mailing addresses. Many IRS notices reflect one address for written correspondence and another address for remitting payments.
Tax Tip #4
Caution: If you decide to deal directly with the IRS rather than obtaining representation, be aware that when a taxpayer speaks or writes to the IRS, what they share with the IRS is placed into the taxpayer’s files. In such situations, it would be in your best interests to first read IRS Publication #1 – Your Rights As A Taxpayer.
If you would like to discuss your business or personal tax planning, tax preparation and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.
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BE SURE TO READ THE DISCLAIMER PAGE: Tax laws, IRS rules and regulations change frequently. Although we hope you’ll find this information helpful, this blog is for educational purposes only and should not be considered as the rendering of tax, legal or investment advice. The publisher shall not assume liability for any losses, injuries, or damages from the display or use of this information.
About F. Bryan Haarlander, EA, CTRS:
Bryan Haarlander is an IRS licensed Enrolled Agent and who owns and operates a specialized tax services firm serving clients in the western suburbs of Philadelphia, PA, which includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, Frazer, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, West Chester in Berks, Chester, Delaware, Montgomery and Philadelphia Counties, as well as clients in Delaware, New Jersey, New York and throughout the continental USA.
A Certified Tax Resolution Specialist, Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems.