Hi – Michelle Divan here. I represent taxpayers in Denver, CO – and nationwide – who cannot pay their taxes or have back tax debt. Each month I grab a topic that is germane to taxpayers that have debt or issues with the IRS. Last month I focused on non-filing taxpayers, and you can see my historic bloc posts here. This month I am focusing my attention and education on people who have received letters from the IRS and what to do.
The IRS mails letters or notices to taxpayers for a variety of reasons including:
- You have a balance due.
- You are due a larger or smaller refund.
- The agency has a question about your tax return.
- They need to verify identity.
- The agency needs additional information.
- The agency changed your tax return.
Here are some do’s and don’ts if you receive a letter:
- Don’t ignore it. This is key – it will not go away! 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 you instructions on what to do.
- Don’t panic. The IRS and its authorized private collection agencies generally contact taxpayers by mail – not the telephone. Most of the time, all you need to do is read the letter carefully and take the appropriate action.
- Do read the notice. If the IRS changed the tax return, you should compare the information provided in the notice or letter with the information in your original return. In general, there is no need to contact the IRS if you agree with the notice.
- Do respond timely. If the notice or letter requires a response by a specific date, you should reply in a timely manner to:
- minimize additional interest and penalty charges.
- preserve your appeal rights if you don’t agree.
- Do pay amount due. I offer this advice with caution. I always tell my client to call me first! You should pay as much as you can, even if you can’t pay the full amount. You have options to pay balances due, such as Installment Agreements or Offers-in-Compromise.
- Do keep a copy of the notice or letter. It’s important to keep a copy of all notices or letters with other tax records. You may need these documents later.
- Do remember there is usually no need to call the IRS. If you must contact the IRS by phone, you should use the number in the upper right-hand corner of the notice. You should have a copy of your tax return and letter when calling. Typically, you only need to contact the agency if you don’t agree with the information, if the IRS requests additional information, or if you have a balance due.
- Do avoid scams. The IRS will never contact a taxpayer using social media or text message. The first contact from the IRS usually comes in the mail. If you are unsure if you money to the IRS, you can view your account online.
I hope it goes without saying – call me first! Generally, it is a simple question or issue, and you want to make sure that you respond per the IRS Instructions. Need Help? You can contact me here.