A taxpayer who receives a letter from the IRS gets stressed out even before they open the letter and read. Not every IRS letter is a threat. Over the course of the year, the IRS sends out tens of millions of notices and letters. Some letters may contain general information, others a request to update information. Of course, some IRS letters include a change the IRS made to a tax return and a request for payment.
Whenever a client receives an IRS letter, here are 10 basic tips you can give your client:
- Don’t ignore it. Whatever the IRS letters contains, make sure that you don’t put it aside and forget about it. Make sure you open it!
- Read the letter carefully. An IRS Notice has an identifying number in the upper right-hand corner. You can read a listing of the IRS notices by numerical order at IRS.gov.
- Understand the instruction. Every IRS letter gives you an instruction about what the IRS wants from you. Pay attention to the specific instructions stated on your letter, so you understand what you need to do to satisfy the inquiry. Consider consulting a tax attorney for next step advice.
- Check your records. If your IRS letter is a notice about a change the IRS made to one of your tax returns, compare what the IRS says to your records. It is important to keep good tax records, so you can make contest the IRS notice if you disagree with it. If the notice lists an amount owing, it is extra important that you check your records.
- Respond quickly. If you disagree with the IRS, don’t delay in responding. Most IRS letters, even the most threatening, give you a chance to present your side of the story before any IRS action is taken. However, if you ignore the IRS letter or don’t respond quickly, serious consequences can happen. If the IRS says you owe them money and you don’t respond, it will lead to IRS collections. This will lead to an IRS Notice of Levy and your wages and assets will be at risk.
- Provide a detailed explanation. If you disagree with what the IRS says about one of your returns, be prepared to provide proof of why the IRS is wrong. Send the IRS copies of any records or documents that you want them to review.
- Include a copy of the IRS letter you received. Most IRS letters have a tear-off portion, located at the bottom of the notice. Make sure to include it, so your letter is processed properly.
- Send to the proper address. The IRS has many offices, located all over the country. Never assume that your correspondence should be sent to where you send your income taxes. Follow the instructions on the notice and send your information only to the address specified.
- Alternatives to mail. Each IRS letter will contain a phone number for you to call if you have questions. Have your IRS letter handy when you call, as well as copies of any information you want to discuss. You can also visit an IRS office, although that is not usually necessary.
- Keep a detailed record. Make sure that you keep all copies of any correspondence you send. Make detailed notes about any conversation that takes place, including the name and IRS ID# of anyone with whom you speak, the date and time, and what you discuss. Again, it’s a good idea to speak with a tax relief attorney for additional guidance.
There’s also a handout I have that you’re free to give to your clients called “Top 5 Things To Do When the IRS Contacts you.” It’s in PDF form and covers both letter and phone correspondence. It can be downloaded here. Don’t let tax law be overwhelming. A tax lawyer can provide the tax resolution and IRS help you deserve. Call a taxation attorney today.