How to Respond to an IRS Notice
Receiving a notice from the IRS can understandably be a source of anxiety for many taxpayers. Whether it is a simple notice or a more complex issue, knowing how to respond effectively is crucial to resolving the matter efficiently and avoiding further complications.
Here are some essential tips from the team at Tucker & Company in Savannah to help you navigate the process with confidence:
1. Review the notice
Before doing anything, take the time to thoroughly read the notice. IRS notices are designed to provide specific information about the issue at hand. They usually include:
- The reason for the notice
- Any action you need to take
- The deadline for responding
- Contact information for further questions
Understanding these details will help you address the notice accurately. I advise you to pay special attention to the deadline, and set a reminder on your calendar. You want to be sure to avoid any unnecessary penalties, interest or complications.
2. Make sure everything is correct
You will then want to verify that the information in the notice is accurate, because the government can make mistakes, too. Common issues can include misapplied tax payments, errors in income reporting, or incorrect calculations. If you identify any discrepancies, gather supporting documentation to support your case. One effective way to do this is by utilizing your IRS taxpayer account. The IRS website (irs.gov) provides links to set up your account, where you can request transcripts, review income sources, check tax balances, and confirm payments. It’s a great resource to verify and correct any discrepancies, and should be your first stop after reading the notice.
3. Keep complete and accurate records
When responding to an IRS notice, it’s critical to keep copies of all correspondence and documentation related to the issue. This includes:
- A copy of the notice itself
- Any letters or forms you send to the IRS
- Names and ID numbers of any IRS agents you speak with
- Supporting documents such as tax returns, receipts, and statements
Organizing these records will help you keep track of your communication with the IRS and provide evidence if needed. The burden of proof often falls upon the taxpayer, so it is crucial to retain records that support your tax return and correspondence with the IRS.
4. Follow Instructions
IRS notices often come with specific instructions on how to respond. This might include filling out certain forms, providing documentation, or making a payment. Follow these instructions precisely to ensure that your response is processed correctly. The IRS has recently implemented some communications to be submitted online, which can help expedite processing when available. If this option is applicable, it will likely be mentioned on the tax notice. Again, be sure to only use official IRS websites.
5. If the situation is too complex for you, hire a professional
If the notice involves complex issues or large amounts of money, consider consulting a tax professional. A certified public accountant (CPA), from a firm such as Tucker & Company, or tax attorney can provide expert advice and help you navigate the situation more effectively. Our office has extensive experience resolving IRS and state tax issues and it is important to engage a professional that has experience with the various nuances of dealing with the IRS.
6. Be careful to avoid scams
The IRS provides various resources to help taxpayers understand and respond to notices. Unfortunately, scammers also take advantage of this to provide fake resources designed to part you from your money.
The IRS website offers detailed explanations and forms, and you can also call the IRS directly for assistance. Be aware that the IRS does not communicate with taxpayers through social media or text messages. If you receive any suspicious communications, it’s important to contact the IRS directly. To avoid scams, always use official IRS contact numbers (which you can confirm with an internet search) and the official website.
7. You may not have to pay in full
If the notice requires payment and you do not have the money to pay in full, you have other options. The IRS offers installment agreements and various payment plans to assist taxpayers in need. You may also qualify for a reduction of penalties through first-time penalty abatement or by demonstrating reasonable cause. To learn more about these options, contact the IRS, visit their website, or consult with a tax professional.
8. Stay on top of it
After responding to the notice, monitor the status of your case to ensure that it’s resolved. Keep an eye out for any further correspondence from the IRS and follow up if necessary. It is important to note that recently the IRS has been extremely delayed in responding to taxpayers so it might take months before you receive a response. Hopefully, the IRS will improve this soon. Although if you don’t receive timely confirmation that your issue has been resolved, it’s a good idea to contact the IRS for an update.
Conclusion
Dealing with IRS notices can be overwhelming, but following these instructions should make it less stressful. The IRS backlog in recent years has made dealing with the IRS more challenging, and delays and errors are particularly frustrating when the situation involves your money. Pause for a moment and realize you are not on your own and there is help if you need it.
Remember, the key is to stay organized, follow instructions, and address any issues timely to resolve your tax matters efficiently. Our office is experienced with this process, and we have the resources available to help you navigate IRS issues and reach a resolution.