HOW TO HANDLE AN IRS LETTER OR NOTICE

Michael Lodge – Listen to my PodCast on IHeart Radio

The IRS is sending out letters to gather more information about you, or to do a letter audit on your tax return.  When you get these letter DO NO PANIC, remain calm and call your tax practitioner.  But the most important thing is to read through the letter, it may be simple enough for you to respond to.  But if you still are unsure, call your tax practitioner.

The IRS mails millions of letters every year to taxpayers for a variety of reasons. Keep the following suggestions in mind on how to best handle a letter or notice from the IRS:

  1. Do not panic. Simply responding will take care of most IRS letters and notices.
  2. Do not ignore the letter. Most IRS notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do. Read the letter carefully; some notices or letters require a response by a specific date.  Scan or fax the notice to your tax practitioner for their review and response.
  3. Respond timely. A notice may likely be about changes to a taxpayer’s account, taxes owed or a payment request. Sometimes a notice may ask for more information about a specific issue or item on a tax return. A timely response could minimize additional interest and penalty charges.  Usually it is better to have your tax practitioner respond because they have all of your documents in their office.  Sometimes taxpayers misplace many documents given them in tax season.  Call your tax practitioner to help you on this issue.  It is the best approach.
  4. If a notice indicates a changed or corrected tax return, review the information and compare it with your original return. If the taxpayer agrees, they should note the corrections on their copy of the tax return for their records. There is usually no need to reply to a notice unless specifically instructed to do so, or to make a payment.  If you do not agree with the findings call your tax practitioner and have him/her respond for you.  They can usually resolve the issue with the IRS for you.
  5. Taxpayers must respond to a notice they do not agree with. They should mail a letter explaining why they disagree to the address on the contact stub at the bottom of the notice. Include information and documents for the IRS to consider and allow at least 30 days for a response.  Remember, it is better to have your tax practitioner respond for you.  They will use the words the IRS understand and can form a correct argument in response.
  6. There is no need to call the IRS or make an appointment at a taxpayer assistance center for most notices. If a call seems necessary, use the phone number in the upper right-hand corner of the notice. Be sure to have a copy of the related tax return and notice when calling.  Always have your tax practitioner go with you to any meeting with the IRS.
  7. Always keep copies of any notices received with tax records.  Your tax practitioner should have all of the documents used to prepare your tax return, however you may have to provide your backup documents used to give your tax practitioners.  Documentation of every line on the tax return is very important – do not make up numbers you can’t support.
  8. The IRS and its authorized private collection agency will send letters and notices by mail. The IRS will not demand payment a certain way, such as prepaid debit or credit card. Taxpayers have several payment options for taxes owed.

Most of the letters are easy to respond to.  But if you need a review of the letter to make sure you have read it correctly and would like some help in responding – call your tax practitioner.  If you would like our firm to help you just send us the tax notice to info@lodge-co.com so we can review and respond to you.

Visit our website at:  www.lodge-co.com