What to Do After Getting A Letter From the IRS
Every year, the IRS sends out millions of notices to taxpayers. These letters are sent for a variety of reasons. Below is a list of ten simple things you need to do when that notice arrives.
1. Don't ignore it. 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.
2. Stay calm. In most cases, a simple response to the notice will be all that is required.
3. Carefully and completely read the whole document. Letters from the IRS are usually sent to address a specific question or problem, and also contain specific information on what you need to do.
4. Check your tax return. Oftentimes, these letters are sent to inform the taxpayer of a change or a correction to their tax return. Look at the information, then compare it to the tax return in question.
5. Don’t reply unless it is necessary. Most of the time, these notices are informational and a response is not necessary. The notice will tell you exactly what to do and if you need to respond. Don’t reply unless the notice asks you to, or if you need to make payment.
6. If you do need to respond, do it right away. If you disagree with the letter, you should respond. Send the response letter to the location listed in the notice with an explanation of why you don’t agree. Make sure to include any relevant information or copies of documents that the IRS will need in order to consider your position. Then, allow a minimum of 30 days to receive the IRS’s response.
If there is a date in the notice, usually it is for one of three reasons:
- To preserve the taxpayer’s right to appeal;
- To prevent delays in processing the return; or,
- To minimize any penalties or interest.
7. Do not call unless necessary. In most cases, it is not necessary to make a call to the IRS. If you do think a call is necessary, there is a phone number listed in the notice’s upper right corner. Make sure to have both the relevant tax return, as well as the notice, available before calling.
If the call resolution will require documents on your behalf, be ready to fax them over to the IRS (we understand that today, most people do not own fax machines. Technology is a wonderful thing, however, and there are free fax services to send faxes online). For example, if you indicated that you made estimated payments, but the IRS does not have a record, you may resolve this by showing them the proof of payment, which you would fax to the agent while on the phone.
8. If your IRS letter arrived late. If the notice has a due date to respond yet it arrived late and the due date passed or is too close, call the IRS immediately to let them know that you received their notice late and need additional time to respond. This is especially relevant for overseas taxpayers with unreliable mailing services. Usually, the IRS gives a one-month extension right away but you must call to get it.
9. Looking to retain professional help? Similar to the prior bullet, if you require professional tax assistance, call the IRS and advise them that you have engaged an accounting firm to resolve the notice, and you are requesting an extension of time so that your representatives can assess and respond on your behalf.
10. Retain the notice. Always keep a copy of IRS notices and letters with your tax records.
To get more details on recent IRS letters please watch our webinar which included live Q&A with our tax experts. We’ve also transcribed this Q&A transcript.