Receiving any correspondence from the IRS can instantly strike fear in the heart of most. You have to admit that one would naturally get a little nervous when you see that the Treasury department wants to have a word with you. In this moment you don’t want to become overcome with panic, you want to prepare! Millions of taxpayers get IRS notices saying there may be an issue or error and you may owe additional tax, including penalties and interest. Just because you get a notice doesn’t mean that it’s correct.
While fear is a completely normal reaction, here are four steps every taxpayer should follow if they receive an IRS notice or letter:
Open the letter RIGHT AWAY.
Don’t delay in opening and reading the correspondence. The notice will state the following:
Issue in question
Due date of response/payment
Whether or not you used a tax professional to file your income tax return, it’s a good idea to contact one for help with your notice. If you have questions or aren’t exactly sure how to meet the demands of the IRS, your tax professional will be able to assist you in the situation.
It’s important to understand your IRS notice or letter.
Make sure you read the instructions associated with the IRS notice or letter carefully. Each notice has specific instructions, so read your notice carefully because it will tell you what you need to do next. Make sure to bring a copy of the letter and your original return complete with your copies of all documents used on the tax return. Regardless of the situation you face, it’s important that you address the situation appropriately and in a timely manner.
Let me be clear, the IRS will not contact you outside of using “snail mail”. The IRS does not solicit payments by phone, email, or social media. If the agency needs information from you, they write a letter first. If you receive that type of contact from someone claiming to be an IRS representative, be wary of a scam.
Check for errors.
Review the notice for any errors, such as a misspelled name or an incorrect Social Security number. Carefully compare any noted corrections or changes in your return with your original submission. These could ultimately be simple mistakes, modifications to correct errors on your original return, or signs that someone has tried to send in a fraudulent tax return in your name.
Ignoring a notice from the IRS could prove detrimental to your current and future financial life. This may be your first instinct, hoping that maybe the IRS will just go away. NOT. The situation is not going to disappear, and you have a finite amount of time to respond before the audit notice turns into a bill. The IRS letter will require a response by a specific date, usually 30 days. Your response should be in writing, and you should retain copies of your correspondence, as well as any information you send along with the correspondence, for example, proof of a particular deduction that you've claimed.
Most mailed notices or letters are simple: you forgot to sign your return, or the IRS recalculated your entries and found that you made a math error and are due a refund. But, there are more ominous ones that may question income or deductions. The bottom line, clarification is needed and resolving a notice can be less painful than you might think.