Getting a letter from the Internal Revenue Service can be scary, whether it arrives on Friday the 13th or any other day.
Most IRS notices are about federal tax returns or tax accounts. And the IRS has lots of questions in these areas. It sends out millions every year.
And while there's no official clinical name for a tax notice phobia (unlike the various Friday the 13th fears of paraskevidekatriaphobia, triskaidekaphobia and friggatriskaidekaphobia) the truth is that there's usually nothing to be afraid of as long as you don't ignore the letter.
To help you over your tax notice fear, here are 13 ways to help you handle this scary and unexpected IRS correspondence.
- Don’t panic. You can usually deal with a notice simply by responding to it.
- Read the notice. It sounds simple, but too many folks just skim the letters, which, despite IRS efforts to write them in plain English, still can be confusing. Each notice has specific instructions, so read your notice carefully because it will tell you what you need to do.
- Note any proposed changes to your tax filing. Your notice will likely be about changes to your tax account, taxes you owe, or a payment request. However, your notice may ask you for more information about a specific issue. Again, see tip #2.
- Make sure the changes are correct. If your notice says that the IRS has changed or corrected your tax return, review the information and compare it with your original return.
- Don't do anything if you agree. Damn! You discover the tax examiner was right. In cases where you agree with the notice's changes, you usually don’t need to reply unless it gives you other instructions or you need to make a payment.
- Let the IRS know if you disagree with the notice. Everyone makes mistakes now and then, even the IRS. If you find the notice is not right, write a letter that explains why you think the agency is wrong. Include information and documents you want the IRS to consider. Mail your response with the contact stub at the bottom of the notice to the address on the contact stub. Allow at least 30 days for a response.
- Call the IRS if you need more information. For most notices, you can figure out what to do by, again, following tip #2. But if after carefully reading the IRS letter you still have questions, call the phone number in the upper right-hand corner of the notice. Be sure to have a copy of your tax return and the notice with you when you call.
- Check your other returns. Make sure your other tax filings, particularly your state tax return that relied on the same information as your federal 1040, don’t have the same mistake.
- Get professional tax help. If you're unsure of what to do, or just really freaked out by the notice, hire a tax professional to help. In this case, you'll also want to fill out section 3 (Authorization) on the notice response form to allow someone, in addition to yourself, to contact the IRS about the notice. Or send the IRS a Form 2848, Power of Attorney and Declaration of Representative to allow someone, such as an accountant or Enrolled Agent, to contact the agency to answer filing questions on your behalf.
- Explore payment plans. If the notice results in changes that mean a new, bigger tax bill, look into the various payment options that the IRS offers.
- Hang onto the notice. Obviously you'll want to keep it handy until the questions raised by the notice are resolved. After that, keep copies of any notices you receive with your tax records.
- Make sure tax identity theft isn't an issue. If you get a notice and realize that the information is wrong because someone else has used your name and Social Security number, let the IRS know immediately. The IRS' walks you through the steps at its identity theft information page.
- Be alert for tax scams. When the IRS has questions about returns, it typically sends letters and notices by mail. It doesn't contact people by email or social media to ask for personal or financial information. If you get a call from someone claiming to be an IRS agent (or in the calls I've gotten, identifying themselves as "This is officer from the IRS") the call most likely is a tax scam. Ignore these crooks demanding that you pay a certain way, such as prepaid debit or credit card. Once you hang up, let the IRS know so it can add the attempted crime to its tax scam database.
You can find out more about responding to a tax notice at the IRS.gov page titled, what else, Responding to a Notice. You also can read more on tax notices and how to deal with them at Tax Topic 653, IRS Notices and Bills, Penalties, and Interest Charges, and Tax Topic 651, Notices – What to Do.
Now that your tax notice fear is taken care of, you just have to make it through the rest of today without running into a black cat or walking under a ladder. Good luck!
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