Deductions, IRS Audit

IRS Notice – If you get one, what do you do now?

August 29, 2013 - Deductions, IRS Audit

LetterThis is the scoop straight from the IRS along with some comments from me. Each year the IRS sends millions of letters and notices to taxpayers. Many people may feel anxious when they receive one. The IRS believe many of these notices are easy to resolve. Basically they just want a little more information about something you put on your return. They might have a question about something you left off your return. Most recently, the IRS has been contacting small business owners to find out if they reported all their cash sales. There are also millions of other letters sent outside of this kind of “special” project.

Here’s what to do if you receive a letter or notice from the IRS:

  1. Don’t panic. Take a deep breath. Follow the instructions in the letter. X
  2. There are many reasons the IRS sends notices to taxpayers. The notice usually covers a specific issue about your account or tax return. It may request payment of taxes, notify you of a change to your account or ask for additional information. X
  3. If you receive a notice about a correction to your tax return, you should review it carefully. You will need to compare the information in the notice to the entries on your tax return. X If you agree with the correction, you usually don’t need to reply unless a payment is due.If you don’t agree with the correction the IRS made, it’s important that you respond as requested. Respond to the IRS in writing to explain why you disagree. X Include any documents and information you wish the IRS to consider. Also include the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the lower left corner of the notice. Allow at least 30 days for a response from the IRS. X
  4. There is no need for you to call or visit an IRS office to answer most IRS notices. If you have questions, call the telephone number in the upper right corner of the notice. When you call, have a copy of your tax return and the notice available. X You will be referring to that notice on that phone call. What they don’t tell you is to be prepared to be on hold for a little while. They get a lot of phone calls. X
  5. Keep copies of any correspondence with your tax records.
If you get an audit notice, consult with your tax advisor. Do not sign anything before you know what you are signing. Don’t agree to pay something you don’t owe.