6 Tips if You Receive a Notice From the IRS

It can be common for the IRS to send out tax notices to taxpayers if they are requesting additional information, or if any adjustments are required on the tax return.

The following tips can help you know what to do, and how to respond, after receiving a notice or letter from the IRS.

Tip #1: Stay Calm

Although it can be alarming to receive a letter or notice from the IRS, it is important to try not to panic. If you receive an IRS notice, it will typically cover a very specific issue about your account or tax return. Notices may require payment, notify of changes to your account or ask you to provide more information. Sometimes, the IRS will end up owing you money, too.

Many of these letters require a simple response and offer specific instructions on what you need to do to satisfy the inquiry. With our help, you can mostly likely handle the review via mail and won’t necessarily have to visit an office or call an IRS representative.

Tip #2: Understand Why You Have Been Contacted

Taxpayers are typically selected through one or more of the following:

• They were selected randomly based on statistical data.
• There is a discrepancy between the source documents (W-2 or 1099, for example) the IRS receives from the provider and what is reported on the tax return. This could identify unreported income from another source, such as a company you may not be familiar with or income reported on an earlier return.
• The IRS questions the accuracy of taxpayer returns. You may receive a correction notice from the IRS with a request for more money. If so, they will be asked to sign and date the notice, and send in their payment.

Note the “CP-90 Final Notice of Intent to Levy and Notice of Your Right to a Hearing” is the only notice that permits the IRS to do anything. After the final notice, the IRS must wait 30 days before taking action. During the 30-day window, we can help you file a request for a meeting with an IRS appeals officer or collection due process.

Tip #3: Review Your Notice

Review the notice to see what adjustments were made. Did you forget to include interest from one of you savings accounts? Did the IRS disallow a dependency exemption because you child’s Social Security number was transposed? If it is determined that the IRS was correct in making the adjustment, then they don’t have to reply unless a payment is due or the notice directs otherwise.

Tip #4: Do the Calculations

Math mistakes can be made by you or the IRS, so it’s best to recheck the calculations. According to the Government Accounting Office, many IRS notices are “incorrect, unresponsive or incomplete.” The good news is that math errors rarely lead to a full-blown audit.

Tip #5: How to Respond

Most of your correspondence with the IRS can be done by mail, but you may want to call an agent if there are questions. Use the telephone number in the upper right hand corner of the notice, and have the tax return and the notice handy to provide information to the agent.

When responding to the IRS, it’s best to send the IRS a printout of the computations, along with any relevant explanation and documentation. Responses should be clear and concise, and request additional information if the request is unclear. Mail the reply with the bottom tear-off portion of the IRS letter to the address shown in the upper left-hand corner of the notice; allow at least 30 days for a response.

Be sure to respond on time, usually within 60 days, or the IRS may put a lien on their property, serve a penalty or take unpleasant action. If you end up owing a lot of money, the IRS will usually allow them to pay the money over time. And, don’t forget about state returns; if you respond to any federal letters, you may have to change the information on those tax returns as well.

Tip #6: Keep Copies of Records

Keeping copies of tax records, including tax returns, source documents, paycheck stubs and cancelled checks, is always good practice. Also, remember to keep all correspondence with the IRS. When dealing with IRS professionals over the phone, be sure to take down their ID numbers, names, the time at which you spoke to them, and specific points the IRS may have covered.

One last point. If you get an unanticipated notice from the IRS (or FTB), please contact us immediately so that we could have ample time to provide a timely, adequate response and straighten out the inquiry with a simple phone call to the IRS, in the case of ambiguity.